Meta has to sell gifs platform Giphy. The British market authority says the takeover could give Meta too much market power in the advertising market. This can only be prevented with a sale.
The Competition and Markets Authority in the UK writes that it has completed its investigation into Facebook’s acquisition of Giphy. Facebook announced in May last year that it was acquiring the poison platform for around 369 million euros. The takeover has not yet been officially completed. That’s not happening now either; the CMA concludes that the acquisition “reduces competition between social media platforms” and that the acquisition will not make Giphy a competitor in advertising.
According to the market watchdog, parent company Meta can increase its “already significant market power” by restricting access to Giphy for competitors. This allows the company to favor its own services such as Facebook Messenger, WhatsApp and Instagram. In addition, Meta can require competitors such as Snapchat, TikTok or Twitter to provide more user data with a Giphy implementation.
The CMA also concludes that the acquisition would disrupt the advertising market. Before the takeover would take place, Giphy would have made a plan to allow brands to advertise on the platform. According to the CMA, the platform could make Giphy a potential competitor to Facebook. That could have resulted in more innovation from the market. Giphy put that plan on hold as soon as the acquisition was announced.
The only way to avoid those problems is to sell Giphy again, the CMA says. The Market Authority concludes that after hearing several alternative plans from Meta. Meta has not yet responded to the watchdog’s ruling.