Meta to sell Giphy, by order of UK competition watchdog

Meta will accept a ruling by UK watchdog company ordering it to sell Giphy, the animated GIF library.

What happened. Meta was originally ordered to sell Giphy last year but they appealed. Today, the UK’s Competition and Markets Authority (CMA) announced that Meta had failed on five of the six objections raised in its appeal. The CMA said that the acquisition should be reversed on the grounds that it “could allow Meta to limit other social media platforms’ access to GIFs, making those sites less attractive to users and less competitive.”

An independent panel noted that Meta’s purchase of Giphy would allow it to increase its market power in multiple ways, including blocking off rival social media sites’ access to its library of GIFs, or forcing them to give over valuable user data in exchange for access.

At the time of Meta’s purchase, Giphy had been developing its own advertising services, which were then added to Meta’s offerings. The CMA said this was a competition problem given that Meta already controls roughly half of the UK’s £7 billion ($8 billion) display advertising market.

In the past, the CMA orders sometimes lead companies to sell parts of globally operated companies. But Meta said that it will sell all of Giphy.

What Meta says. “We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter. We will work closely with the CMA on divesting Giphy.” When asked if the divestment would apply to all of Giphy’s international operations, a Meta spokesperson said “Yes, this applies globally.”

Dig deeper. You can read the full article from The Verge here.

Why we care. The sale doesn’t affect advertisers directly, but marketers, Meta users, and creators who use Giphy regularly may be able to access the animated short clips on more social media platforms.