Facebook ordered by UK Competition Watchdog to sell Giphy – Deadline

The UK regulators today ordered Meta, formerly Facebook, to wind up their acquisition of the popular GIF manufacturing and sharing app Giphy after concluding that the deal was anti-competitive – a significant call amid growing pressure on both sides of the Atlantic to rein in the power of social media. fight, including by breaking it up.

“We have decided that the only effective way to address the competition issues we have identified is for Facebook to sell Giphy in its entirety to a suitable buyer,” the Competition & Markets Authority said in a statement.

This would be the first time the CMA has attempted to complete a completed acquisition of a technology giant. The decision was not a complete surprise, following preliminary results issued in August. The CMA recently fined Facebook £ 50.5 million (just under $ 70 million) for violating an initial enforcement order related to the deal. Facebook acquired the venture-backed startup in May 2020 for $ 400 million.

U.S. lawmakers and regulators have also called for Facebook to be broken up, pointing to its acquisitions of Instagram and WhatsApp, accusing the company of purposefully stifling competition by acquiring promising rivals. Last year, the Federal Trade Commission sued to dissolve Facebook in the U.S. District Court for the District of Columbia, but Judge James Boasberg said the agency failed to present evidence of its monopoly power in social networks. In an amended complaint filed in August, the FTC added more details about its allegations. Facebook asked the judge early last month to dismiss the revised case with prejudice.

Facebook has also dealt with the fallout from volumes of internal documents published by whistleblower Frances Haughen. The documents and her testimony in the US, UK and other global capitals resulted in a stream of bad press for the Mark Zuckerberg company throughout the fall, marked by the founder-CEO renaming it Meta and outlining plans and investments in what he calls the next phase of the Internet, Metaverset, based on virtual reality.

In its statement today, the CMA said it “concluded that Facebook’s acquisition of Giphy would reduce competition between social media platforms and that the agreement has already removed Giphy as a potential challenger in the display advertising market.”

Specifically, the independent CMA panel that reviewed the merger concluded that Facebook would be able to increase its already significant market power over other social media platforms by “denying or restricting other platforms’ access to Giphy GIFs, thereby driving more traffic to Facebook-owned pages – Facebook, WhatsApp and Instagram – which already account for 73% of user time spent on social media in the UK, or changing access conditions by, for example, requiring TikTok, Twitter and Snapchat to provide more user data to access Giphy GIFs. “

On display advertising, the panel found that before the merger, Giphy had launched innovative advertising services, which it was considering expanding to countries outside the US, including the UK. Giphy’s services enabled companies – such as Dunkin ‘Donuts and Pepsi – to promote their brands through visual images and GIFs, which had the potential to compete with Facebook’s own display advertising. “

“Giphy’s service would also have encouraged greater innovation from others in the market, including social media and advertisers,” the CMA said. “Facebook terminated Giphy’s advertising services at the time of the merger, removing an important source of potential competition. The CMA considers this particularly worrying as Facebook controls almost half of the £ 7 billion display advertising market in the UK.”

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