A UK competition regulator, Competition and Markets Authority, CMA, has ordered Meta to sell Giphy.
The regulator said Meta owning Giphy will harm social media users and U.K. advertisers.
According to the regulator, Meta’s control of Giphy would reduce competition between social media platforms.
Also, it revealed that Meta’s ownership of Giphy has already removed one potential rival in the advertising market.
Giphy in focus:
Gihpy is a popular search engine for GIFs.
GIFs are short, looping videos and animations.
People use GIFs for their stories and direct messages.
Users also use GIFS to express particular feelings towards an issue.
Such feelings could be sadness, funny, displeasure, affection, respect, sarcasm, mocking or even jokes.
Meta, then Facebook, had bought Giphy for $315 million in 2020.
Meta had said it would integrate the service with Instagram.
It said it was integrating the services “so that people can find just the right way to express themselves.”
Also, when Meta bought Giphy, it said the acquisition will make it easier for people to find relevant GIFs for their stories and direct messages.
Meanwhile, Twitter (TWTR), Snapchat, Apple’s (AAPL) iMessage and Slack (WORK) currently use Giphy’s services.
The fears and why CMA want’s Meta to sell Giphy:
However, according to the regulator, Meta has too much monopoly over social media and advertising.
CMA said already, Meta is driving more traffic to its Facebook, WhatsApp and Instagram platforms with Giphy.
It said this is placing Meta at a more advantaged position than other rival platforms.
Similarly, the regulator noted that in the UK alone, Meta’s Facebook controls nearly half of the £7 billion ($9 billion) display advertising market.
Since other big and rival techs rely on the services of Giphy, Meta could decide one day and limit their access to the Giphy.
Also, CMA said the acquisition of Giphy has already removed a potential competitor from the ad market.
For instance, the regulator said, before Meta bought the company, Giphy had launched innovative advertising services to rival Meta.
It said Giphy was considering expanding its advertisement to countries including the United Kingdom.
CMA said Giphy allowed companies like Dunkin’ Donuts and Pepsi (PEP) to promote their brands through visual images and GIFs.
This could have competed with Facebook’s own display advertising services.
However, then Facebook terminated Giphy’s advertising services at the time of the merger.
This cut off major competition against Facebook, the CMA said.
Meanwhile, another concern is that Meta could also change the terms of access to Giphy’s GIFs.
This change could then force competitors like TikTok, Twitter and Snapchat (SNAP) to provide more user data to access GIFs.
According to Stuart McIntosh, head of CMA, forcing Meta to sell Giphy is to promote healthy competition.
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This is in line with the antitrust scrutiny by governments around the world against big techs.
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”
CMA said the fears of monopoly and cutting off competition can only stop if Meta sells Giphy.
In a statement, it said thus:
“After consulting with interested businesses and organizations — and assessing alternative solutions … 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.”
Meta disagrees with order:
Meanwhile, Meta has disagreed with the order mandating it to sell Giphy.
It said on Tuesday that it was considering “all options, including appeal.”
A spokesperson with Meta said “Both consumers and Giphy are better off with the support of our infrastructure, talent, and resources.”
The spokesperson added saying, “Together, Meta and Giphy would enhance Giphy’s product for the millions of people, businesses, developers and API partners in the UK and around the world who use Giphy every day, providing more choices for everyone.”
World governments are launching anti-trust investigations against big tech companies.
Regulators are blocking acquisition deals by big tech that could make them have too much monopoly and power.
These blockages will protect social media users and promote healthy competition.
Also, other big techs who had similar interest of monopoly will ditch their dreams.
Although Meta said it would appeal the order, selling off Giphy could take a longer time.
Nevertheless, by controlling big techs, regulators are protecting people who have become too reliant on technology.