Tuesday, December 6, 2022

After a conflict over antitrust, Meta accepts a UK order to sell Giphy

After a judgment maintained its belief that the acquisition may harm its competitors and eliminate a prospective competitor in advertising, Britain’s competition regulator on Tuesday ordered Meta (META.O), the owner of Facebook, to sell Giphy, a platform for animated photographs. Meta declared that it will abide by the Competition and Markets Authority’s (CMA) directive to terminate the 2020 agreement.

“We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter,” a Meta spokesperson said in a statement. “We will work closely with the CMA on divesting Giphy.”

The decision was the first time a regulator made a U.S. internet giant sell a business it had previously bought, and it revealed a renewed commitment to closely examine digital transactions. Global regulators are becoming more proactive in controlling large corporations. The purchase of Within Unlimited Inc by Meta was challenged by American antitrust authorities earlier in October on the grounds that it would “tend to create a monopoly” in the market for VR-focused fitness applications.

The European Union has taken the lead in the fight against the major digital companies, establishing ground-breaking privacy and antitrust laws and levying fines in the billions of dollars to get them to alter their business practices.

The Giphy purchase, reportedly worth $400 million, was halted by the British regulator in November 2021 over worries that Meta may restrict or refuse access to Giphy’s GIFs to rivals like Snapchat and Twitter. The European Union has taken the lead in the fight against the major digital companies, establishing ground-breaking privacy and antitrust laws and levying fines in the billions of dollars to get them to alter their business practices.

Meta appealed the ruling, but a tribunal upheld the CMA’s decision on five out of six grounds in June. The CMA said it had considered new submissions from Meta and Giphy and additional evidence since the appeal, but had not changed its view.

“This deal would significantly reduce competition in two markets,” said Stuart McIntosh, chair of an independent inquiry group.

“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,” he added.

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