Citing potential harm to social media users and U.K. advertisers, the U.K.’s Competition and Markets Authority (CMA) announced its decision to require Meta (formerly Facebook) to sell GIF generator Giphy, according to a Tuesday (Nov. 30) press release.
The CMA determined that Facebook’s acquisition of Giphy would limit competition between social media platforms, and concluded that the transaction has already removed Giphy as a possible contender in the display advertising market, the announcement stated.
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising,” said Stuart McIntosh, chair of the CMA independent inquiry group undertaking the phase 2 investigation.
In September, following a previous CMA announcement related to Giphy, Facebook fired back, questioning the “enforceability of any divestment order and whether any such order could be effective,” as PYMNTS reported.
Yet in Tuesday’s announcement, the watchdog group’s independent panel found that Meta could bolster its market power in comparison to other social media platforms by reducing or eliminating access to Giphy GIFs on other platforms, thereby driving users to Facebook-owned platforms, including WhatsApp and Instagram, which account for more than 70% of U.K. users’ time on social media.
Tuesday’s determination is in line with the CMA’s Phase 2 provisional findings, which were released in August. As part of that analysis, the CMA found that Facebook’s acquisition of Giphy could lead the social media giant to change the terms for Giphy access, in turn boosting its market power. The CMA also said in August that the acquisition terminated Giphy’s plans to broaden its display advertising services to the U.K., removing a major source of competition.
Facebook’s Giphy acquisition is not the only deal to raise a red flag within the CMA. In August, the group voiced concerns that NVIDIA’s planned acquisition of the British chip designer Arm would limit competition, as PYMNTS reported.