Meta’s Giphy Acquisition Set to Get Blocked by Regulator

  • The UK antitrust agency will block Meta’s acquisition of Giphy, sources told the Financial Times.
  • Meta – formerly Facebook – announced the acquisition of Giphy in May 2020.
  • The regulator said in a preliminary ruling that the merger would affect competition.

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Meta – formerly known as Facebook – is being blocked by UK antitrust authorities, according to a Financial Times report.

Sources familiar with the matter told the FT that UK competition and market regulators are expected to reverse Meta’s acquisition of Giphy in the coming days.

The FT has not specified when the announcement will be made, but the CMA has until December 1 to publish its decision.

Facebook announced in May 2020 that it was acquiring Giphy for $ 400 million. Antitrust authorities in the UK and Australia announced a month later that they would be looking into the deal.

The CMA’s first enforcement order prevented Facebook from integrating with Giphy while it was conducting the investigation.

The CMA issued a preliminary determination in August 2021 that the combination would affect competition and that the only effective remedy for Meta would be to sell Giphy.

In that finding, the CMA said that control of Giphy could give Facebook an unfair advantage over competing social media platforms like Snapchat and TikTok, which also use Giphy. It also argued that the merger would remove Giphy as a potential competitor of Meta in Display

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Although Meta and Giphy are both US companies, the CMA handles any acquisitions where the combined parties control 25% of any particular good or service supplied in the UK. The CMA said that Meta and Giphy together would control an 80-90% market share of searchable animated sticker libraries.

The CMA fined Facebook $ 70 million this October as part of its investigation, saying the company had not provided enough information on how it continues to compete with Giphy. Facebook appealed the fine, saying it was doing its best to meet the requirements of the CMA.

Meta did not immediately respond when asked to comment on the FT report by Insider. The CMA declined to comment when contacted by Insider.

Professor Greg Taylor, associate professor of economics at the Oxford Internet Institute, said it was within the power of the CMA to block the takeover entirely. He added the CMA could also choose to block certain parts of the deal.

If the CMA pushes through against the Meta acquisition, it will mark a turning point for big tech companies, according to Taylor.

“Outside of the tech world, mergers are being investigated all the time, and it’s not uncommon for them to be blocked in order to get some sort of remedy. In the tech space in particular, there has been almost no major intervention to prevent the merger of any of the major tech companies, despite the fact that they have acquired hundreds of companies together over the past few decades, “Taylor told Insider.

“The first time a merger like this is blocked is really a line in the sand in my opinion,” he added.

Meta, along with other big tech companies, has seen increased antitrust scrutiny in recent years, and in July 2020, David Cicilline, Chairman of the US House of Representatives Antitrust Subcommittee, said the company should be liquidated for “classic monopoly behavior.”

Earlier this month, the founders of a photo app called Phhhoto filed a lawsuit alleging Facebook cloned and destroyed their app after initially offering a partnership.

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