Meta, parent company of Facebook, is being forced to sell one of its acquisitions for the first time, after a two-year dispute with U.K. antitrust regulators. The Competition and Markets Authority is requiring Meta to sell Giphy, a gif database, after an inquiry found that ownership over the image format would give Meta an unfair advantage over rival social media platforms, users and businesses.
According to The New York Times, Meta bought Giphy for $315 million back in 2020, one of the less expensive purchases the tech giant has made. The United Kingdom’s Competition and Markets Authority claimed that this would reduce competition, however, as Meta would dominate both social media and advertising spheres.
After opening a case on the acquisition, the regulatory group confirmed that Meta’s ownership of Giphy would push users to Meta-owned platforms for access to gifs. In addition, Meta would be able to limit usage of gifs on rival platforms and require its U.K. users to provide more personal data to use gifs, according to an official press release.
The deal had an effect on U.S. advertising, as well. In the United States, Giphy had coordinated with brands such as Dunkin’ Donuts and Pepsi to promote their products with gifs. The company had plans to expand to the United Kingdom, but was required to terminate its advertising service upon merging with Meta, the Competition and Markets Authority’s press release stated.
The authority submitted its findings and decision on the case in November 2021. The official press release said that despite Meta’s appeal following the decision, the Competition Appeal Tribunal agreed with the authority on five of six challenged grounds in July.
The tech giant is now required to sell Giphy to an approved buyer, as stated in the Competition and Marketing Authority’s order. Though Meta has resisted this decision for two years, the company has agreed to relinquish the gif database.
“We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter,” said a Meta spokesperson, CNET reported. “We will work closely with the CMA on divesting Giphy.”
Many are citing the Competition and Marketing Authority’s actions as a “landmark move,” as CNBC reported that this is the first instance of an antitrust regulator having undone a Big Tech deal after being finalized. The authority’s decision has set a precedent for how regulators will handle Big Tech cases going forward.
Paul Stone, from the Charles Russell Speechlys law firm, spoke with the BBC about the decision.
“The significance of the CMA’s decision is that it underscores the body’s concerns about the impact of the deal on future innovation in digital advertising,” Stone said. “This seems to be key to the CMA’s approach to regulating big tech in the U.K., where preserving competition from small but potentially significant future challengers can be at least as important as maintaining competition between already established players in the sector.”
The authority’s decision won’t deter Meta from acquiring other companies, however. The BBC reported that following the order to divest Giphy, Meta said in a statement, “We are grateful to the Giphy team during this uncertain time for their business, and wish them every success. We will continue to evaluate opportunities — including through acquisition — to bring innovation and choice to more people in the U.K. and around the world.”