Facebook Parent Meta Ordered to Sell Giphy After Losing Fight in U.K.
The U.K.’s top competition authority said that
META 0.71%
owner
Meta Platforms Inc.
META 0.71%
must sell social-media animated-images company Giphy, affirming an earlier ruling that its 2020 acquisition of the company could limit competition.
The ruling all but ends a yearslong saga in which a foreign regulator made a rare intervention in an already-consummated deal between two American companies. British regulators had ordered Meta to operate Giphy separately while the deal was under review.
Meta, then known as Facebook, bought Giphy in May 2020 for $315 million. The company, with offices in New York City and Los Angeles, allows users to search for, create and share short animated videos, or GIFs, which have become popular in social-media posts, texts and other communications.
The U.K.’s Competition and Markets Authority initially ordered Meta to sell Giphy last year. Meta appealed the decision. In July, the Competition Appeal Tribunal backed the CMA in five out of six challenges to the CMA ruling. On Tuesday, after taking that ruling into consideration, the CMA issued a revised decision that again ordered Meta to sell Giphy.
Meta said that it is disappointed by the order, but it won’t appeal the decision further. The company says it will work with the CMA to sell Giphy, and is awaiting more details in the coming weeks from the regulator about how it should do so.
The decision comes as the CMA is asserting itself on the global stage as a technology regulator—opening antitrust cases against tech companies alongside others stemming from the U.S. and European Union. The CMA has open cases looking at issues including how
Alphabet Inc.’s
Google brokers ads on third-party websites, and the control the regulator says
Apple Inc.
and Google exercise over mobile-phone software. The companies say they comply with competition rules and are working with the regulator.
Meta’s acquisition of Giphy “would significantly reduce competition in two markets,” said
Stuart McIntosh,
the chairman of the investigative team appointed by the CMA to review the deal. By buying Giphy, Mr. McIntosh said Facebook had removed a “potential challenger in the U.K. display ad market, while also giving Meta the ability to further increase its substantial market power in social media.” A sale of Giphy is the only way to address the issue, he said.
Meta had said in the past that consumers and Giphy are better off with the infrastructure and resources Meta can provide. The company said at the time of the deal that it would integrate Giphy into its Instagram platform.
The CMA began probing Meta’s Giphy deal soon after it was announced. Last fall, it fined Meta 50.5 million pounds, or $57.2 million, saying the company had failed to provide required updates outlining its compliance with the initial enforcement order in relation to the merger review. Meta at the time disputed the fine for what the company called a “best effort compliance approach.”
The move by the CMA isn’t an unprecedented one. In April 2020, it blocked
Sabre Corp.’s
tie-up with rival travel booking service Farelogix Inc., saying it was anticompetitive. The regulator said the deal could have reduced innovation in the sector and led to higher fees for certain products.
Write to Ian Walker at [email protected] and Sam Schechner at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
The U.K.’s top competition authority said that
META 0.71%
owner
Meta Platforms Inc.
META 0.71%
must sell social-media animated-images company Giphy, affirming an earlier ruling that its 2020 acquisition of the company could limit competition.
The ruling all but ends a yearslong saga in which a foreign regulator made a rare intervention in an already-consummated deal between two American companies. British regulators had ordered Meta to operate Giphy separately while the deal was under review.
Meta, then known as Facebook, bought Giphy in May 2020 for $315 million. The company, with offices in New York City and Los Angeles, allows users to search for, create and share short animated videos, or GIFs, which have become popular in social-media posts, texts and other communications.
The U.K.’s Competition and Markets Authority initially ordered Meta to sell Giphy last year. Meta appealed the decision. In July, the Competition Appeal Tribunal backed the CMA in five out of six challenges to the CMA ruling. On Tuesday, after taking that ruling into consideration, the CMA issued a revised decision that again ordered Meta to sell Giphy.
Meta said that it is disappointed by the order, but it won’t appeal the decision further. The company says it will work with the CMA to sell Giphy, and is awaiting more details in the coming weeks from the regulator about how it should do so.
The decision comes as the CMA is asserting itself on the global stage as a technology regulator—opening antitrust cases against tech companies alongside others stemming from the U.S. and European Union. The CMA has open cases looking at issues including how
Alphabet Inc.’s
Google brokers ads on third-party websites, and the control the regulator says
Apple Inc.
and Google exercise over mobile-phone software. The companies say they comply with competition rules and are working with the regulator.
Meta’s acquisition of Giphy “would significantly reduce competition in two markets,” said
Stuart McIntosh,
the chairman of the investigative team appointed by the CMA to review the deal. By buying Giphy, Mr. McIntosh said Facebook had removed a “potential challenger in the U.K. display ad market, while also giving Meta the ability to further increase its substantial market power in social media.” A sale of Giphy is the only way to address the issue, he said.
Meta had said in the past that consumers and Giphy are better off with the infrastructure and resources Meta can provide. The company said at the time of the deal that it would integrate Giphy into its Instagram platform.
The CMA began probing Meta’s Giphy deal soon after it was announced. Last fall, it fined Meta 50.5 million pounds, or $57.2 million, saying the company had failed to provide required updates outlining its compliance with the initial enforcement order in relation to the merger review. Meta at the time disputed the fine for what the company called a “best effort compliance approach.”
The move by the CMA isn’t an unprecedented one. In April 2020, it blocked
Sabre Corp.’s
tie-up with rival travel booking service Farelogix Inc., saying it was anticompetitive. The regulator said the deal could have reduced innovation in the sector and led to higher fees for certain products.
Write to Ian Walker at [email protected] and Sam Schechner at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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