The U.K. CMA's order that Facebook parent, Meta Platforms sell Giphy marks the first time a major global regulator has weighed in against a Silicon Valley giant and ordered it to unwind a deal after completion

In line with its Phase 2 provisional findings issued in August, the Competition and Markets Authority (CMA) has today concluded that Facebook’s acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market.

The independent CMA panel reviewing the merger has concluded that Facebook would be able to increase its already significant market power in relation to other social media platforms by:

denying or limiting other platforms’ access to Giphy GIFs, driving more traffic to Facebook-owned sites – Facebook, WhatsApp and Instagram – which already account for 73% of user time spent on social media in the UK, or

changing the terms of access by, for example, requiring TikTok, Twitter and Snapchat to provide more user data in order to access Giphy GIFs.

As part of its in-depth investigation, the CMA also looked at how the deal would affect the display advertising market. It found that, before the merger, Giphy had launched innovative advertising services which it was considering expanding to countries outside the US, including the UK. Giphy’s services allowed companies – such as Dunkin’ Donuts and Pepsi – to promote their brands through visual images and GIFs.

The CMA found that Giphy’s advertising services had the potential to compete with Facebook’s own display advertising services. They would have also encouraged greater innovation from others in the market, including social media sites and advertisers. Facebook terminated Giphy’s advertising services at the time of the merger, removing an important source of potential competition. The CMA considers this particularly concerning given that Facebook controls nearly half of the £7 billion display advertising market in the UK.

After consulting with interested businesses and organisations – and assessing alternative solutions (known as ‘remedies’) 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.

Stuart McIntosh, Chair of the independent inquiry group carrying out the phase 2 investigation, said:

The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market.

Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs.

By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising."

U.K.’s Competition and Markets Authority

Meta reacts:

“We disagree with this decision. We are reviewing the decision and considering all options, including appeal. Both consumers and GIPHY are better off with the support of our infrastructure, talent, and resources."

[url=https://www.google.com/amp/s/www.washingtonexaminer.com/policy/uk-regulator-orders-facebook-to-sell-giphy-in-global-first%3f_amp=true]Meta [/url] now must decide whether to comply with the regulator’s order or to appeal to the United Kingdom’s Competition and Appeals Tribunal, which will scrutinize the Competition and Markets Authority’s decision on the matter.

Facebook has a long history of trying to corner the social media space with minimal pushback. It bought up social media rival Instagram for $1 billion in 2012 and WhatsApp, which it purchased for $19 billion in 2014.

In August, the U.S. Federal Trade Commission filed an amended antitrust lawsuit against Facebook alleging social media monopolization. This month, the FTC argued that the federal court should allow the lawsuit to proceed because the company has "interfered with the competitive process by targeting nascent threats through exclusionary conduct."

Giphy, styled as GIPHY, is an American online database and search engine that allows users to search for and share short looping videos with no sound, that resemble animated GIF files.

Meta (formerly Facebook) bought Giphy Inc. for a reported $400m in May last year.

Mark didn't want competitors. That's why he is buying every other social networks