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UK competition regulator orders Facebook to sell Giphy

UK competition regulator orders Facebook to sell Giphy
1 Dec, 2021

The UK’s Competition and Markets Authority (CMA) has asked Meta (formerly Facebook) to sell the GIF database and search engine Giphy, a company that Meta acquired about a year and a half ago. The competition regulator decided that Facebook’s acquisition of Giphy will “reduce competition” between social media platforms and “that the deal has already removed Giphy as a potential challenger in the display advertising market.”

A panel from the CMA decided that Faceboom would be able to increase its “significant market power” through the acquisition by “denying or limiting other platforms access to Giphy” and driving more traffic to Instagram, WhatsApp, Instagram and other Facebook-owned sites. It noted that such platforms already account for 73% of the time users spend on social media. It also said that the acquisition would allow Meta to change the terms of access and require other platforms to “provide more user data” for using Giphy’s library.

“As part of its in-depth investigation, the CMA also looked at how the deal would affect the display advertising market. It found that, before the merger, Giphy had launched innovative advertising services which it was considering expanding to countries outside the US, including the UK,” the regulator said in a statement. “Giphy’s services allowed companies – such as Dunkin’ Donuts and Pepsi – to promote their brands through visual images and GIFs,” it added, noting that Giphy’s planned advertising services could have competed with Facebook’s own display advertising services.

“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising,” the CMA said in its statement.

The social media giant had bought Giphy for $315 million in May last year, and had said that 50% of the GIF platform’s traffic at the time was already coming from the Facebook family of apps. “We are reviewing the decision and considering all options, including appeal,” the company said in a statement.

While the UK’s move is perhaps the most significant regulatory pushback against big tech firms like Facebook so far, it’s not the only one. The social media firm, which renamed itself to Meta earlier this year, has been facing such allegations from competition regulators worldwide. 

A lawsuit filed by the US Federal Trade Commission against the company in August had also called for the breaking up of Facebook and its subsidiaries, and called CEO Mark Zuckerberg a “monopolist”.

The Competition Commission of India (CCI) had also raised concerns about data sharing agreements between homegrown telco Reliance Jio and Facebook in October last year. The CCI’s concerns came while approving Facebook’s investment in Jio Platforms Limited for acquiring a 9.99% stake in the company. 

Facebook had told the CCI that its agreements with Jio do not allow the sharing of critical and confidential data and that data shared between the two companies is “neither exclusionary nor rare”.