The British competition watchdog said that the merger has already removed Giphy as a possible competitor in the UK display advertising market and has ordered Meta to fully sell the business to an approved buyer


Facebook owner Meta ordered by the UK CMA to divest Giphy. (Credit: Thomas Ulrich from Pixabay)

The UK Competition and Markets Authority (CMA) has directed Meta (formerly Facebook) to divest GIFs provider Giphy after concluding that the previously closed deal can impact social media users and British advertisers.

The direction from the competition watchdog follows its phase 2 provisional findings released in August 2021. It also comes after a fine of £50.5m imposed by the CMA on Facebook in October 2021 for breaching its enforcement order related to the Giphy deal.

The CMA said that the transaction has already taken off Giphy from being a possible competitor in the display advertising market. The regulator ruled that Meta has to sell 100% of the GIFs provider to an approved buyer if its competition concerns are to be addressed.

CMA’s phase 2 investigation independent inquiry group chair Stuart McIntosh said: “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.”

The CMA’s contention about the deal is that it would deny or restrict the access of other platforms to Giphy’s GIFs. This would bring in more traffic to Meta’s platforms such as Facebook, Instagram, and WhatsApp, said the CMA.

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 CMA noted that at the time of the merger, Facebook had terminated Giphy’s advertising services, which resulted in the removal of a major source of potential competition. The merger was closed in May 2020.

In its investigation, the CMA came to a conclusion that Giphy’s advertising services could potentially compete with the display advertising services of Facebook. The British competition watchdog called this particularly concerning as the social media major controls almost half of the £7bn display advertising market in the UK.