UK Meta Orders to Sell Giphy

UK Meta Orders to Sell Giphy

CMA orders Facebook Meta owner to sell Giphy – the first time a British regulator has prevented a takeover by a Silicon Valley tech giant

The Competition Markets Authority (CMA) handed Mark Zuckerberg a setback, after the UK’s competition regulator ordered Meta to ditch Giphy.

The CMA complied with its original ruling, after informing the British regulator UK silicone In July it will reconsider its decision as part of an “urgent review” of its original ruling.

Now, three months after the general conference of the capital market was held on Tuesday Declared to stick to their original arrangement To sell the business – the first time the British regulator has prevented a takeover by the Silicon Valley tech giant.

Buy Giphy

Meta said she accepted Tuesday’s CMA’s decision as the final word on the matter, and would sell Giphy to settle a dispute that has kept the two sides feuding for nearly two years.

Giphy was acquired by Meta in May 2020, and at the time promised to give third parties the same level of access to Giphy content as before.

Both companies are headquartered in the United States.

However, in June 2020, the UK Competition Authority got involved, as it said Giphy had done business in the UK.

The CMA examined whether the $400m (£317m) deal “led or is expected to result in a significant reduction in competition in any UK market or markets”.

The CMA began its initial investigations in January 2021, and in April 2021 the CMA said it would deepen its investigation into the acquisition of Giphy, which was headquartered in New York and Los Angeles prior to its acquisition.

The deal has raised British competition concerns because Giphy is widely used on social media, and while Facebook said that half of Giphy’s traffic originates from Facebook apps, such as Instagram and WhatsApp, Giphy also provides images to others including Snapchat, TikTok and Twitter.

Facebook had also previously said it was planning to integrate Giphy into Instagram’s photo app, which could give it access to large amounts of data.

This raised regulatory concerns about Facebook’s current market power in serving ads.

CMA أمر command

Things became even more worrying for Mark Zuckerberg in August 2021, when the CMA “provisionally found that Facebook’s merger with Giphy would harm competition between social media platforms and eliminate a potential competitor in the display ad market.”

Meta strongly objected, and in September 2021 the UK competition regulator said it had no authority to intervene in the matter, because Giphy was “an American company with business strictly limited to the United States”.

Then the CMA fined Facebook 50.5 million pounds ($69.6 million) for “intentionally” breaching a compliance disclosure order imposed during its investigation into its purchase of Giphy.

Then in November 2021 after completing its investigation, the CMA ordered Facebook to sell Giphy after deciding that the US company’s treatments did not answer its concerns.

In December 2021, Meta confirmed that it was appealing the CMA’s decision, saying that the evidence did not support the CMA’s conclusion that the deal was a threat to its competitors or might affect competition in advertising.

Capital Markets Authority Decision

The CMA’s confirmation of its order in November 2021 is the first time the British regulator has blocked a major digital takeover, and comes amid increased scrutiny of “big tech” companies and their acquisitions.

After a three-month review of the sell order, the independent CMA concluded that Meta would be able to increase its already significant market power by:

  • Deny or limit other social media platforms’ access to Giphy GIFs, thus pushing people to meta-owned sites, which already make up 73% of a user’s time spent on social media in the UK, or
  • Changing access conditions – for example, it may require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more data from UK users in order to access Giphy GIFs

The CMA also found that the merger would negatively affect the display advertising market.

The CMA said it found that Giphy’s advertising services had the potential to compete with Meta’s, and that it would encourage more innovation from Meta and other market players. However, Meta terminated Giphy’s advertising services upon acquisition, removing a potential advertising tool for UK businesses. The CMA considers this particularly concerning given that Meta controls nearly half of the £7 billion display advertising market in the UK.

The CMA concluded that the only way to avoid the significant impact the deal would have on competition was to sell Giphy entirely to an authorized buyer.

meta reaction

“This deal will significantly reduce competition in two markets,” noted Stuart Mackintosh, head of the independent investigative group that conducts the investigation of the remittances. “This has already eliminated a potential competitor in the UK display ad market, while also giving Meta the ability to increase its significant market power in social media.”

“The only way this can be addressed is to sell Giphy,” Macintosh added. “This will advance innovation in digital advertising, and also ensure that UK social media users continue to benefit from access to Giphy.”

Meta expressed his disappointment with the CMA’s decision, but agreed with the ruling.

A Meta spokesperson told The Guardian newspaper. “We will work closely with the CMA to divest Giphy.”

“We are grateful to the Giphy team during this turbulent time for their business, and we wish them every success,” said Meta. “We will continue to assess opportunities – including through acquisitions – to bring innovation and choice to more people in the UK and around the world.”

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