Meta intends to sell Giphy as ordered by the UK competition watchdog

The parent company of Facebook and Instagram, Meta, said that it will accept the decision of the UK competition watchdog on the sale of the GIF library Giphy. This was stated by Meta representative Matthew Pollard in an interview to The Verge: “We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter. We will work closely with the CMA on divesting Giphy.”

When asked if the share sale would apply to all of Giphy’s international operations, Pollard said:

“Yes, this applies globally.”

Meta was required to sell Giphy last year, but appealed the decision. Today, the UK’s Competition and Markets Authority (CMA) announced that Meta had failed to meet five of the six objections raised in its appeal. The CMA said the acquisition should be canceled on the grounds that it “could allow Meta to restrict other social media platforms’ access to GIFs, making those sites less attractive to users and less competitive.”

In the past, CMA asset sale orders resulted in the companies selling only part of the global operations, but Meta has confirmed that it will sell the US company Giphy in its entirety. Typically, the CMA oversees such sales, assessing the potential buyers.

The CMA’s decision was supported by a number of findings. The independent panel noted that acquiring Giphy would allow Meta to increase its market power in several ways, including blocking rival social networks from accessing its GIF library or forcing them to hand over user data in exchange for access to that library. The panel also noted that prior to the acquisition, Giphy had been developing its own advertising services, which were instead incorporated into Meta’s offerings. The AMCU said this was a competition issue as Meta already controls around half of the £7bn ($8bn) UK display advertising market.

“This deal would significantly reduce competition in two markets,” Stuart McIntosh, head of the CMA’s independent investigative group, said in a press statement. “t 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.”