UK competition watchdog orders Meta to sell gif website Giphy | Meta

Facebook’s parent company Meta has received an order from the UK’s competition watchdog to sell gif creation site Giphy, the first time the regulator has moved to block a deal struck by a Silicon Valley giant.

The Competition and Markets Authority, which provisionally ruled in August that the sale was the only way to resolve competition concerns, said the move would “protect millions of social media users” and stop Facebook “from increasing its significant social media power.”

The CMA last year launched an investigation into Meta’s $400m (£290m) takeover of Giphy, the largest supplier of animation images to social networks such as Snapchat, TikTok and Twitter, after identifying competition concerns.

The regulator said that Meta could cut off the supply of motion pictures to competitors, or demand more user data from them in order to continue using Giphy. The CMA said the acquisition would also remove a potential competitor from the UK’s £7 billion display advertising market, where Facebook is the biggest player, representing about half of the market.

The CMA said it was “particularly concerning” that Facebook had terminated Giphy’s advertising services, which the company was about to expand, at the time of the merger.

“By requiring Facebook to sell Giphy, we are protecting millions of social media users and encouraging competition and innovation in digital advertising,” said Stuart Mackintosh, chair of the independent investigative group that conducted the CMA’s in-depth investigation into the deal. “Without taking action, it would also allow Facebook to increase its significant market power in social media even further, by controlling competitors’ access to Giphy gifs.”

Meta has yet to respond to the CMA’s decision, but it is believed that it will likely appeal the decision. In response to the CMA’s interim findings in August, which suggested selling Giphy was the only option, it accused the UK regulator of “engaging in extraterritoriality”.

Meta said at the time that blocking the deal to buy Giphy, which is based in New York and has no UK operations, would “send a chilling message to budding entrepreneurs: Don’t build new businesses because you won’t be able to sell them.” .

The CMA and Meta were at odds during the investigation process. In October the CMA moved to fine him £50.5m for “intentionally” refusing to provide information to prove it was following an order to keep Giphy’s business separate from Facebook during the investigation period.

“This should serve as a warning to any company that believes they are above the law,” said Joel Bamford, director of mergers at the CMA, at the time.

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