Nov 30, 2021 - Technology

U.K. regulators order Facebook-owner Meta to sell Giphy

Illustration: Sarah Grillo/Axios

Regulators in the U.K. on Tuesday said they have directed Facebook parent company Meta to sell Giphy after finding "the takeover could reduce competition between social media platforms and increase Facebook's already significant market power."

Why it matters: Facebook agreed to buy Giphy in May of last year for an estimated price of $400 million. The deal almost immediately invited antitrust scrutiny, given the increased attention to Facebook's growing market power.

Details: In a statement, the U.K.'s competition and markets authority concluded that the deal would be anticompetitive because Facebook could theoretically increase market power by "denying or limiting other platforms’ access to Giphy GIFs," or "changing the terms of access," to its GIFs for competitive sites.

  • Regulators also determined that the deal was uncompetitive because it shut down Giphy's advertising business, therefore eliminating Giphy’s competition to Facebook's ad business.
  • As a result, regulators said Facebook "will also be required to reinstate the innovative advertising services that Giphy offered before the merger."
  • Facebook did not immediately return a request for comment.

Be smart: GIFs, or short videos used in conversation online to express reactions, are valuable to social platforms because they increase engagement.

  • Google acquired GIF startup Tenor in 2018. That deal was presumably much smaller in scale, which is perhaps why it didn't receive as much regulatory scrutiny.

The big picture: The decision comes amid a period of heightened scrutiny on Facebook and Big Tech for its market power. Lawmakers in the U.S. and around the globe are currently probing Facebook for anticompetitive practices.

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