January 21, 2022

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UK meta sales require Gphy to avoid "GIF monopoly"

UK meta sales require Gphy to avoid “GIF monopoly”

Meta ordered the recent acquisition of Giphy by regulators concerned about the impact of the business on rivals.

The UK Competition and Markets Commission on Tuesday (30) said meta control over the popular search engine for GIFs – short looping videos and animations – will reduce competition between social media sites and has already eliminated a potential competitor in the advertising market.

Facebook (FB), also known as Meta, is said to have bought Giphy in 2020 for $ 400 million. The purpose of this service is to integrate with Instagram, making it easier to find relevant GIFs for their stories and live messages.

In the initial announcement of this agreement, Facebook promised to give third parties the same level of access to Giphy’s content as before. However, within a month of the acquisition being announced, the CMA said it was investigating the matter.

“After consulting with interested companies and firms – and evaluating the alternative solutions offered by Facebook – it can only resolve its competitive concerns by fully selling Giphy to an authorized buyer,” CMA said in a statement.

The technology company said Tuesday it did not agree with the CMA and was considering “all options, including appealing in court.”

“Consumer and Giffy are both great with the support of our infrastructure, skills and resources,” a Meta spokesman said.

“Together with Meta and Gifi, Giphy will enhance the product for millions of people, businesses, developers and API partners in the UK and around the world, who use Giphy every day, and give everyone more options.”

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In its initial findings, released in August, the regulator said Facebook’s control over Giphy would allow it to reduce access to GIFs on other social media sites.

Giphy’s services are now integrated with sites such as Twitter (TWTR), Snapchat, Apple’s iMessage (AAPL) and Slack (WORK).

Although far from the biggest deal Meta has ever made, Giphy’s acquisition is the company’s first top deal to be scrapped by government officials.

The discovery is a blow to meta’s aspirations in the midst of intense optimism from governments around the world, and may be a red flag for other large technology companies seeking to acquire in this regulatory environment.

The CMA said in August that Giphy plans to expand to the UK before acquiring its growing advertising business, which could provide a new way for British brands to advertise themselves and create a direct challenge to Facebook in the advertising market.

“However, after this deal, Facebook ended Giphy’s paid advertising partnerships, meaning that the main source of potential competition was lost,” CMA said in a blog post.

(Rob North, Brian Fung and Kaya Yurieff contributed to this article).

(Translated text. Click here Original, read in English)