Is it oninstagram? Yes! What is the phone number for WhatsApp? Go crazy. Don't make any changes to GIFs. Britain's competition watchdog decided to block Meta's takeover of Giphy. The UK's Competition and Markets Authority ruled that Meta must sell all of the GIFs it paid $400 million for. It is a global first. Never before has a tech giant been ordered to back out of a completed deal rather than pay a fine or make promises about how the businesses would operate. The parent company of Facebook isn't happy. The company disagrees with the decision and is considering all of its options, including an appeal. Usually a cautious bunch of lawyers, they agree that the decision of the CMA is a significant moment in the global regulatory wrangling of Big Tech, as it means deals that slipped through in the past may now have a new bar to clear. Richard Pepper is a partner at the law firm Macfarlanes.
That realization means regulators everywhere will be on high alert for what the legal world calls "killer acquisitions", where an established company buys an innovative startup in an attempt to squash the competition it could pose in the future. The Office of Fair Trading waved through Facebook's takeover of the photo-sharing service in 2012 in what was the most high-profile probe into the deal outside the US. Eleanor Tyler, a legal analyst at a legal research company, says that the same worldwide enforcers that allowed Facebook to suck up other platforms are now very wary of even small purchases by the major platforms. This shows a change in attitude.
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Giphy is a small acquisition compared to other well-known acquisitions. It cost $19 billion in 2014, and $2 billion in the year before that. Regulators are starting to think that smaller acquisitions can damage competition. Rebecca Slaughter, US Federal Trade Commissioner, said in September that she thinks of serial acquisitions as a Pac-Man strategy. The impact of hundreds of smaller acquisitions can lead to a monopoly.
Giphy is not the whole game, but it is a crucial pellet for either Mark Zuckerberg or Pac-Man. Giphy and its main rival, Tenor, are often used by anyone on any major social media or messaging platform who wants to send a Gif. Meta said it bought Giphy to help users express themselves. The deal could result in another side effect: giving Meta power over its competitors to deny them precious GIFs or demand data in exchange.
This concern only made up half of the argument. The regulator warned about the impact of reduced competition on a market that isn't yet exist. Giphy had the potential to compete with Facebook in the UK advertising market if it had not been bought. Giphy had launched innovative advertising services which it was considering expanding to countries outside the US, including the UK, according to the watchdog.
