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In the Land of Trillion Dollar Goliaths | UK regulator concludes that Meta’s Giphy acquisition hurts competition and must sell it

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Meta, the company formerly known as Facebook, is getting a major legal challenge to its recent Giphy acquisition from the UK’s Competition and Markets Authority (CMA) with the body concluding that the acquisition hurts competition and must sell it.

In a new press release, the UK CMA concludes that Facebook’s acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market. The post goes on to detail that after an independent review by a CMA panel it concludes that Meta “would be able to increase its already significant market power in relation to other social media platforms by:

  • denying or limiting other platforms’ access to Giphy GIFs, driving more traffic to Facebook-owned sites – Facebook, WhatsApp and Instagram – which already account for 73% of user time spent on social media in the UK, or
  • changing the terms of access by, for example, requiring TikTok, Twitter and Snapchat to provide more user data in order to access Giphy GIFs.

Going even further into the methodology, the CMA also examined how the acquisition would affect the display advertising market and found that “before the merger, Giphy had launched innovative advertising services which it was considering expanding to countries outside the US, including the UK. Giphy’s services allowed companies – such as Dunkin’ Donuts and Pepsi – to promote their brands through visual images and GIFs.”

The UK CMA went on to say “Giphy’s advertising services had the potential to compete with Facebook’s own display advertising services. They would have also encouraged greater innovation from others in the market, including social media sites and advertisers. Facebook terminated Giphy’s advertising services at the time of the merger, removing an important source of potential competition.” The CMA said that they “consider this particularly concerning given that Facebook controls nearly half of the £7 billion display advertising market in the UK.”

Finally in its conclusion the UK CMA says that they find the only way to remedy this is for Meta (formerly Facebook) to sell Giphy in its entirety to an “approved buyer.”

Additional details about phase two of the investigation were provided by Stuart McIntosh:

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  • “The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market.”
  • “Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs.”
  • “By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”

A former industry insider and tech industry enthusiast.

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