The Competition Appeal Tribunal upheld the British Competition and Markets Authority’s decision that the previously closed acquisition of Giphy by Meta reduces innovation in UK display advertising and limits options for social media users in the UK
Meta ordered to divest Giphy by the UK CMA. (Credit: Pixelkult from Pixabay)
The UK Competition and Markets Authority (CMA) has reissued an order to Meta to divest GIFs provider Giphy after the Competition Appeal Tribunal (CAT) upheld the regulator’s decision that the acquisition substantially reduced competition in the UK.
In November 2021, the British competition watchdog asked Meta to sell Giphy after concluding that the previously closed deal reduces innovation in UK display advertising and limits options for social media users in the UK.
However, Meta appealed against the CMA’s decision to the Competition Appeal Tribunal. In July this year, the Tribunal ruled in favour of the CMA on five of the six challenged aspects.
The Tribunal agreed with Meta on a procedural ground pertaining to the sharing of third-party confidential information.
Following the Tribunal’s decision, the CMA reconsidered its earlier decision and carried out a fast-tracked review. The CMA found that the merger would deny or limit access to Giphy GIFs on other social media platforms, driving users to Meta-owned sites.
Besides, the deal could change the terms of accessing the GIFs. As an example, the CMA said that other platforms such as Twitter, TikTok, and Snapchat may have to give more user data for accessing Giphy’s GIFs.
The competition regulator noted that upon acquisition, Meta had terminated Giphy’s advertising services, which resulted in the removal of a major source of potential competition for ad tools.
In its investigation, the CMA came to the conclusion that Giphy’s advertising services could possibly compete with the display advertising services of Facebook. The British competition watchdog called this particularly worrying as Meta controls nearly half of the £7bn display advertising market in the UK.
The UK CMA has ruled that Meta has to sell 100% of the animated images platform to an approved buyer if its competition concerns are to be addressed.
CMA independent inquiry group chair Stuart McIntosh said: “This deal would significantly reduce competition in 2 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.
“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.”