UK Regulator Directs Facebook to Sell off Giphy Over Competition Concerns -- Update
November 30 2021 - 6:10AM
Dow Jones News
By Joe Hoppe
The U.K.'s competition regulator said Tuesday that it has
directed Meta Platforms Inc., formerly Facebook, to sell
social-media animated images company Giphy, with the social media
company considering its options.
Facebook bought Giphy in May 2020, paying $315 million,
according to documents published as part of the Competition and
Markets Authority's review.
The British regulator said that the social media platform's
acquisition of Giphy would reduce competition between social-media
platforms and that the deal has already removed Giphy as a
potential challenger in the display-advertising market, in-line
with its provisional findings published in August.
Meta said it in a statement that disagrees with the decision and
that both consumers and Giphy would be better off with its support.
It said it is reviewing the CMA's directive, along with all of its
options, including appealing.
"Together, Meta and Giphy would enhance Giphy's product for the
millions of people, businesses, developers and API partners in the
U.K. and around the world who use Giphy every day, providing more
choices for everyone," a Meta spokesperson said.
After consulting with interested businesses and organizations,
along with assessing alternative solutions, the CMA concluded that
its competition concerns can only be addressed by the company
selling Giphy in its entirety to another buyer.
"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, chairman of the
independent inquiry group carrying out the investigation.
Giphy allows users to search for, create and share animated
images known as GIFs, which stands for graphics interchange format.
When Facebook bought Giphy last year, the company said it planned
to integrate it into Instagram and other apps.
The CMA said that the merger would have increased Facebook's
already significant market power, driving more traffic to Facebook
sites--which already account for 73% of user time spent on social
media in the U.K.
given the majority of Facebook's major competitors--including
Twitter Inc., TikTok and Snapchat--use Giphy GIFs, those sites
could be affected if the social-media giant opted to deny its peers
access to the images, or if it changed usage terms such as
requiring more user data, the CMA said.
The regulator also said that before Giphy was acquired by
Facebook, it had launched its own innovative paid advertising
business in the U.S., which had the potential to compete with
Facebook's advertising services, and had been considering expanding
to other countries including the U.K.
The CMA began probing the deal in June 2020 and launched an
initial investigation in January. It fined Facebook 50.5 million
pounds ($67.2 million) in October, saying it had breached the
initial enforcement order in relation to the merger.
Write to Joe Hoppe at joseph.hoppe@wsj.com
(END) Dow Jones Newswires
November 30, 2021 05:55 ET (10:55 GMT)
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