The CMA first ordered Meta to sell Giphy last November amid competition concerns. The company has now accepted the latest ruling as ‘the final word on the matter’.
Meta will have to sell Giphy following a final decision from the UK’s competition watchdog.
The UK Competition and Markets Authority (CMA) found that the acquisition restricts other social media companies’ access to GIFs and harms competition in the UK’s display advertising market.
With its latest ruling published today (18 October), the CMA laid to rest a lengthy regulatory battle over the acquisition that was first announced in 2020.
The watchdog ordered the Facebook parent company to sell the GIF maker in November last year following concerns that the deal would lead to “a substantial lessening of competition within any market or markets in the UK for goods or services”.
Meta contested the decision, but the social media giant largely failed in its appeal – losing on five out of six challenged grounds in a competition tribunal this June.
The CMA conducted an expedited review following the appeal. The latest ruling is based on further investigation over the past three months, including additional third-party evidence and new submissions from Meta and Giphy.
The CMA found Meta’s purchase of Giphy problematic on two accounts.
First, it said Meta would be able to increase its already significant market power by denying or limiting other social media platforms’ access to Giphy GIFs. The CMA said Meta-owned sites such as Facebook and Instagram already make up 73pc of user time spent on social media in the UK.
Second, it noted that the deal would give Meta the ability to change the terms of access by requiring Giphy customers such as TikTok, Twitter and Snapchat to provide more data from UK users to access Giphy GIFs.
Stuart McIntosh, chair of the independent inquiry group carrying out the remittal investigation, said that the deal would “significantly reduce” competition in two different markets.
“It has already resulted in the removal of a potential challenger in the UK display ad market, while also giving Meta the ability to further increase its substantial market power in social media,” he said.
“The only way this can be addressed is by the sale of Giphy. This will promote innovation in digital advertising, and also ensure UK social media users continue to benefit from access to Giphy.”
In a statement to media outlets, a Meta spokesperson said the company was “disappointed by the CMA’s decision” but accepts the latest ruling “as the final word on the matter”.
10 things you need to know direct to your inbox every weekday. Sign up for the Daily Brief, Silicon Republic’s digest of essential sci-tech news.