The United Kingdom’s Competition and Markets Authority has directed Facebook to sell Giphy over concerns that the acquisition would reduce competition among social media platforms. It said that Meta’s Facebook, WhatsApp, and Instagram account for 73% of user time on social media in the UK and the purchase of Giphy could limit other platforms’ access to Giphy GIFs and ultimately drive more traffic to Meta-owned platforms.
While it’s possible that Facebook wouldn’t restrict access to Giphy GIFs, the CMA worries that it could change the terms of service so that other platforms such as TikTok, Twitter, and Snapchat would be forced to hand over more user data for access to Giphy GIFs. Another aspect that the CMA pointed out is that Giphy was just getting into the ad space in the United States and could have done the same in the UK but won’t have the opportunity to do so if Meta buys it. Meta is already a dominant player in the ad space and this move looks like it’s trying to limit competition.
Stuart McIntosh, Chair of the independent inquiry group carrying out the investigation said:
“The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market.
Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs.
By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”
The CMA’s announcement said that the competition concerns can only be addressed if Meta sells Giphy to an approved buyer in its entirety. It’ll be interesting to see how Facebook responds to this going forward as it disagrees with the CMA’s line of argument.