The UK's competition regulators ordered Meta, the company that used to be known as Facebook, to sell Giphy.
The Competition and Markets Authority, a non-ministerial government department promoting competition for consumers, concluded that the tech giant's acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger.
Giphy was acquired by Facebook for $400 million.
The market power of Facebook/Meta is disproportionate, increasing it by denying other platforms access to Giphy, and requiring other major social media platforms to provide more user data to access Giphy's library.
Giphy's brand services, which it was considering expanding to countries outside the U.S., including the UK, could have competed with Meta for display ad space. Giphy's commercial tools allowed brands to advertise with creative GIFs, but due to the merger, this is no longer possible.
The press release states that the CMA considers this particularly concerning given that Facebook controls nearly half of the display advertising market in the UK.
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The chair of the independent inquiry group carrying out the investigation said that without action, it will allow Facebook to increase its market power in social media even further. He said that by ordering the sale of Giphy, the CMA is protecting millions of social media users and promoting competition and innovation in digital advertising.
Since Facebook bought Giphy in 2020, Meta has been investigated. Giphy would not have become a social media or messaging competitor to Facebook without the sale, according to Facebook.
Facebook was fined over $60 million by the UK's Competition and Markets Authority for breaching an initial enforcement order after it bought Giphy. The fine was due to the fact that Facebook refused to report all the required information. The multiple warnings it gave Facebook made the company's failure to comply deliberate.
Meta said in a statement that it is assessing its options, including an appeal. Robin Koch, Meta's EU director of policy communications, said that Giphy's product would be enhanced with Meta's help.
Mashable reached out for further comment.
