Meta ordered to sell Giphy by UK's competition watchdog CMA

The United Kingdom‘s competition watchdog has reissued an order to Meta to sell the Giphy platform for animated images..Information Guide Nigeria

The Competition and Markets Authority (CMA) declared this ruling to be final after engaging in back-and-forth with the tech giant since announcing its decision last year.

The CMA determined that the takeover of the website for gif creation could be detrimental to social media users and advertising.

A spokesperson for Meta stated the company accepted the decision but was “disappointed”

This is the first time the United Kingdom has blocked a tech giant’s acquisition, signalling a new resolve to scrutinise digital deals.

In 2020, Meta acquired Giphy, the largest provider of animated gifs to social networks including Snapchat, TikTok, and Twitter.

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The CMA conducted an investigation into the sale and published its original decision in November 2021, ordering Meta to dispose of Giphy.

During the investigation, Meta, formerly known as Facebook Inc., was fined a record £50.5m for refusing to cooperate with the CMA.

Meta anticipated that the acquisition of Giphy would facilitate the discovery of gifs and stickers on its social networks Instagram, WhatsApp, and Facebook.

Despite Meta’s assertion that Giphy would be “openly available” to other social networks, the CMA investigation determined that the acquisition would harm competition in social media and advertising.

Meta appealed this decision, but in July the Competition Appeal Tribunal ruled in favour of the CMA on all grounds except one, which involved confidential third-party information.

After reaching this conclusion, the CMA stated that it reevaluated its original decision to require Meta to sell Giphy and stood by it.

It expressed concern that the agreement would not only restrict users’ options on social media, but also reduce innovation in digital display advertising in the United Kingdom.

Stuart McIntosh, the chairman of the independent inquiry group conducting the CMA’s investigation, stated that Meta had no choice but to sell Giphy.

“This deal would significantly reduce competition in two markets,” he said.

“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.”

In a statement, the social network said it accepted the decision, adding: “We are grateful to the Giphy team during this uncertain time for their business, and wish them every success.

“We will continue to evaluate opportunities – including through acquisition – to bring innovation and choice to more people in the UK and around the world.”

Paul Stone, from law firm Charles Russell Speechlys, told the BBC: “The significance of the CMA’s decision is that it underscores the body’s concerns about the impact of the deal on future innovation in digital advertising.

“This seems to be key to the CMA’s approach to regulating big tech in the UK, where preserving competition from small but potentially significant future challengers can be at least as important as maintaining competition between already established players in the sector.”Jamb Result

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