16/08/2022

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Meta ordered to sell Giphy GIF search engine by United Kingdom antitrust authorities

The former Facebook has been ordered to cut ties with Giphy due to the potential to shut out market competitors.

Meta (formerly Facebook) has been under the spotlight for quite a few years by antitrust authorities for its acquisition of media sharing companies and platforms, but a recent decision by the United Kingdom authority is taking official action. Meta has been ordered to relinquish its ownership of the Giphy GIF search engine company due to its potential to stifle competition among media search engine and sharing companies.

UK’s Competition and Markets Authority (CMA) issued a decision on November 30, 2021, as reported by CNN, ordering that Meta cut ties with its acquisition of Giphy, citing that the deal could hurt competitors as the primary reason. Specifically, the CMA stated that Meta’s control over one of the most popular search engines for short, looping animations and videos would entirely remove a potential rival in advertising and threaten competition in the social media industry.

Facebook's shift to the Meta name came as the company was already under scrutiny for use of information and arguably anti-competitive business practices, the acquisition of Giphy included.
Facebook’s shift to the Meta name came as the company was already under scrutiny for use of information and arguably anti-competitive business practices, the acquisition of Giphy included.

Although Meta stated it would still grant third parties a consistent level of access to Giphy services, the CMA had looked into the matter and was unconvinced of Facebook’s intentions.

“After consulting with interested businesses and organizations — and assessing alternative solutions … put forward by Facebook — the CMA has concluded that its competition concerns can only be addressed by Facebook selling Giphy in its entirety to an approved buyer,” the CMA said in a statement.

Meta acquired Giphy in 2020 to the tune of $315 million and has worked to integrate it into Instagram since. It has been a part of the company’s strategy to create a combined “metaverse” (which inspired the name change of the Facebook company).

Nonetheless, Meta hasn’t escaped scrutiny over its use of information, aggressive acquisition of companies, and user trust. This push marks one of the first government-backed decisions to force the company to sell an acquisition. As regulation and scrutiny of Meta continue, this could be the first of further such official decisions stifling the social media giant’s shift and expansion.