Facebook/Meta Giphy Acquisition Overview:
- Why: The regulator believes Meta has gone too far with its acquisition which would prevent fair market competition if allowed to continue.
- Who: The Competition and Markets Authority (CMA) has ordered Meta Platforms Inc, formerly known as Facebook, to sell recently acquired Giphy.
- Where: Meta and Giphy are both U.S.-based companies.
Facebook, now under the moniker Meta Platforms Inc, has been ordered to unwind a $400 million deal to purchase display advertising company Giphy, by the Competition and Markets Authority (CMA) in order to prevent a monopoly.
Facebook’s US$315 million acquisition of Giphy in 2020 already removed Giphy as a “potential challenger” in the advertising market, according to the CMA. Allowing the merger to continue would only further increase Meta’s market power in other social media platforms and remove competition from the market.
In the UK, 73 percent of user time on social media is already spent on Meta’s own websites, noted the regulatory body.
Meta can appeal the decision.
In a statement, the company said it “disagree[s] with this decision,” arguing that it complied with the CMA’s previous order to operate Giphy and that consumers and Giphy benefit more with Giphy under Meta’s wing.
Meta Dominates Display Advertising Market Opportunity
The CMA was particularly concerned with Meta’s decision to squash Giphy’s pre-merger display advertising venture. These paid-advertising services, which Giphy was considering expanding to the UK among other countries, allowed companies to promote their brands through GIFs and other images.
The enterprise posed a challenge to Meta’s advertising services, the CMA said. Once the acquisition was complete, Meta terminated Giphy’s advertising services.
The CMA also voiced concern about Meta’s acquired ability to dictate how other social media platforms, such as Twitter, TikTok, and Snapchat, would be able to use Giphy. Meta could require such platforms to provide more data in order to use Giphy.
Meta could even prevent other platforms from using Giphy altogether, forcing consumers towards its own platforms such as Facebook, WhatsApp, and Instagram.
Altogether, the CMA says its antitrust concerns will be alleviated with the sale of Giphy which will protect “millions of social media users” and promote “competition and innovation in digital advertising.”
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