The British competition watchdog ordered Facebook to sell animated graphics startup Giphy after finding the acquisition would reduce competition between social media platforms.
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The Competition and Markets Authority (CMA) said the deal has already removed Giphy as a potential challenger in the display advertising market.
As per the findings of the regulator, the merger would allow Facebook to increase its already significant market share by denying or limiting other platforms’ access to Giphy GIFs and driving more traffic to Facebook-owned sites. Facebook, WhatsApp and Instagram account for 73% of user time spent on social media in the UK.
Besides, it could require other platforms such as TikTok, Twitter and Snapchat to provide more user data to access Giphy GIFs.
“The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market,” Stuart McIntosh, Chair of the independent inquiry group carrying out the phase 2 investigation, said in a statement.
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”
According to the CMA, Giphy’s advertising services had the potential to compete with Facebook’s own display advertising services but the social media giant terminated Giphy’s advertising services at the time of the merger, removing potential competition.
The regulator had fined Facebook about $70 million in October for breaching an order imposed during the investigation into the deal.