In a ruling that is the first of its kind .. Britain orders Meta to sell Giphy

The UK competition regulator has officially decided to cancel the acquisition of Giphy by Meta, the parent company of Facebook, a year and a half after the social media giant first announced it. It will acquire the popular website for creating and sharing GIFs.

In a press release, the Competition and Markets Authority (CMA) said it came to the decision after its investigations found that the acquisition could harm competition among social media platforms, and that its concerns “can only be addressed by selling the entire Gify company to an authorized buyer.”

The authority added that the acquisition could be used to deny or limit other platforms’ access to the Giphy platform, and to attract more visits to Facebook, WhatsApp and Instagram.

Concerns have been raised that the acquisition could be used to require other platforms to provide more data to access GIF’s images.

The CMA also believes that Givi’s advertising services could have competed with Meta, but it was shut down as a result of the merger.

“The association between Facebook and Giphy has already removed a potential competitor in the display ad market,” Stuart Mackintosh, head of the Independent Investigative Group, said in a statement, referring to Meta. “Without taking action, Facebook will also be allowed to increase its significant market power in social media even further, by controlling competitors’ access to Givi.”

“By asking Facebook to sell Giphy, we’re protecting millions of social media users, and fostering competition and innovation in digital advertising,” Mackinnosh added.

The Financial Times reported that this would be the first time that the Capital Markets Authority had attempted to decipher a completed acquisition by the tech giant.

Although Meta may appeal the decision, the UK regulator’s decision sets a notable precedent for large tech purchases in the future.

Despite being the first decision of its kind, the Capital Markets Authority’s decision was not surprising after the preliminary results report issued in August confirmed the necessity of canceling the deal.

Meta argued that Gifi does not have an “audience with its own characteristics” (networking sites)

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In response to the decision, Meta’s director of EU policy communications, Robin Koch, said the company was considering all of its options, including an appeal.

“Both consumers and Giphy are better off supported by our infrastructure, talent, and resources,” Koch said in a statement to The Verge. “Together, Meta and Givi will enhance the Givi product to the millions of people, businesses and developers in the UK and around the world who use Givi every day, providing more choice for everyone.”

Meta has also previously challenged the CMA’s competition concerns, suggesting that there was absolutely no chance of Givi’s advertising business becoming a strong contender.

In response to the CMA’s investigation, the company argued that Givi did not have “a distinct audience of its own”, and when it announced the acquisition, Meta said it had saved 50 percent of the operating costs of the Givi service. It also said that “developers and API partners will continue to have the same access to the GUI APIs.”

In response to the CMA’s interim findings, Meta said the regulator is “sending a chilling message to budding entrepreneurs: (Don’t build new businesses because you won’t be able to sell them)”.

And although Meta pledged to work with the CMA on its investigation, the regulator finally fined the company 50 million pounds ($70 million) for failing to comply with the terms of the initial enforcement order. The authority said Meta “willingly decline to report all requested information” about its compliance with the order.

Gifi has raised $150 million in funding since its inception, but has yet to make a profit before its acquisition, and the money has reportedly run out.

The company was sold to Meta in a deal worth $315 million, lower than the previous valuation given to it by investors and a sign of its financial troubles.

While the CMA investigation was ongoing, Gifi’s 100-plus employees were unable to become full-fledged employees of Meta, even though Meta was paying the company’s bills to continue its operation.

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