Facebook is not allowed to keep the acquired poison platform Giphy. The UK market regulator believes the acquisition will curtail competition and gives some good reasons for doing so.
Facebook (which today goes by Meta) bought Giphy in May 2020 for $400 million. But the UK’s Consumer and Markets Authority (CMA) already questioned that deal this summer, saying the two together are detrimental to competition. Facebook itself minimized that and found that judgment unreasonable and disproportionate.
The CMA maintains that position in its final report. Meta has to sell Giphy again. Facebook’s acquisition could raise competition concerns in both the provision of display advertising in the UK and the delivery of social media services worldwide, including the UK. Facebook must sell Giphy,” it reads.
The CMA clarified that the advertising services Giphy developed before the acquisition could potentially compete with Meta’s own advertising models and thus fuel innovation in that market. This will disappear with the takeover. That may seem like a detail, but the CMA notes that Facebook already controls nearly half of the display advertising market, worth £7 billion in total.
Another argument is that the acquisition gives Facebook the power to disadvantage competitors. It could choose, for example, to no longer give Twitter or Snapchat access, making integration of Giphy on other social media less smooth. But it could also adjust the terms of use, forcing other social media to pass on more data if they want to continue using Giphy.
Those are not vague suggestions. It has been clear from internal documents and previous disclosures at Meta for some time that Mark Zuckerberg’s company is tracking possible competitors and wants to buy them before they pose a threat. Matters that have led to the acquisitions of Instagram and WhatsApp, among other things. Facebook also has a reputation for collecting as much data as possible about users, even if they do not use a Meta service. The acquisition of Giphy also fits in that context, as a result, the British regulator now wants the company to be sold again.