UK antitrust watchdog has blocked Facebook’s acquisition of Giphy and ordered the social network to sell the GIF-sharing platform, saying the deal harms social media users and advertisers by reducing competition for animated images .
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The Competition and Markets Authority said on Tuesday that the deal would allow Facebook — now known as Meta — to “improve its already important business” by denying or limiting other platforms’ access to Giphy GIFs and driving traffic to Facebook-owned sites. Will increase market power”. It has been noted previously that there is only one other large provider of GIFs, Google’s Tenor.
The regulator was also concerned that the deal removed potential competition from the UK’s $9.3 billion display advertising market, of which Facebook controls half.
It is the first time the watchdog has sought to open a tech deal, marking an escalation by regulators to tame the digital giant.
Facebook, which has been renamed Meta, said it disagrees with the decision and is considering all of its options, including an appeal.
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“Both Consumer and Giphy are better equipped with the support of our infrastructure, talent and resources,” the company said. “Together, Meta and Giphy will enhance Giphy’s product range for the millions of people, businesses, developers and API partners in the UK and around the world who use Giphy every day, providing more options for everyone.”
After consulting with other businesses and groups and assessing alternative solutions proposed by Facebook, the watchdog concluded that “its competition concerns can only be addressed by selling Giphy solely to a Facebook-approved buyer.” could.”
Stuart McIntosh, president of the independent group that investigates the watchdog, said the deal “has already removed a potential challenge in the display advertising market.”
“Without action, this would allow Facebook to exert even further its significant market power in social media, by controlling competitors’ access to Giphy GIFs,” he said. “By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”
New York-based Giphy’s library of short looping videos, or GIFs, is a popular tool for Internet users to send messages or post to social media.
The two sides have reportedly engaged in a bitter fight over the $400 million deal.
The Competition and Markets Authority said in a tentative decision in August that Facebook should be forced to sell Giphy. The social giant responded with a strongly worded letter, saying there were “fundamental errors” in the provisional decision.
Last month, the watchdog fined Facebook $67.4 million for failing to provide information needed for the investigation, saying the company’s failure to comply was intentional.
The watchdog has said that prior to the deal, Giphy was looking at expanding its advertising services to other countries, including the UK. This would have added a new player to the market and encouraged more innovation from social media sites and advertisers, but Facebook ended Giphy’s advertising partnerships after the deal was announced, it said.
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