Regulators in the United Kingdom have succeeded in doing something the U.S. government has, so far, failed to do: Get Facebook to admit defeat.
The social media giant has been ordered to sell its Giphy subsidiary as the 2020 merger raised the risk of substantially less competition in the digital advertising market. Facebook parent Meta says it will comply with the ruling.
It’s a rare circumstance of a deal being scuttled long after it had closed. Facebook bought the animated GIF meme company in 2020 for roughly $400 million without raising any eyebrows among U.S. antitrust regulators (although that was before the Biden administration and its very Meta-skeptical antitrust enforcers became entrenched).
The U.K. first ruled that Facebook must sell Giphy in late 2021, a decision Meta appealed. A court ruled against that appeal in June, sending the matter back to the country’s Competition and Markets Authority. After another three months reviewing the purchase, the CMA ultimately found it gave Meta too much power.
“Following its review, the CMA concluded Meta would be able to increase its already significant market power by: denying or limiting other social media platforms’ access to Giphy GIFs, thereby pushing people to Meta-owned sites, which already make up 73% of user time spent on social media in the U.K., or changing the terms of access,” the CMA said in a statement. “For example, it could require Giphy customers, such as TikTok, Twitter, and Snapchat, to provide more data from U.K. users in order to access Giphy GIFs.”
The U.K. decision comes as antitrust scrutiny in the social media space is on the rise. The Federal Trade Commission in July sued to block Meta’s purchase of virtual reality app creator Within. And the Justice Department and 48 states are urging a federal appeals court to reinstate an antitrust suit against the company that was dismissed in 2021 on the grounds that states had waited too long to sue.
Of course, the extra money from a Giphy sale could come in handy for Facebook. The company has spent $15 billion so far on its efforts to build the metaverse and earlier this year, reported the first year-over-year decline in revenue in its history.
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