UK's CMA orders Facebook owner Meta to sell Giphy

The UK’s Competition and Markets Authority has ordered Facebook and Instagram owner Meta to sell gif creation website Giphy.

In a final decision on Tuesday, the competition watchdog said it had found that Meta’s takeover of Giphy could allow it to limit other social media platforms’ access to GIFs, making those sites less attractive to users and less competitive.

It also said the deal has removed Giphy as a potential challenger in the UK display advertising market, preventing UK businesses from benefiting from innovation in this market.

The CMA had already ruled in August of last year that the takeover could harm competition. In November 2021, it ordered a sale of Giphy. Meta then appealed the decision to the Competition Appeal Tribunal, and the CMA was forced to reconsider after the tribunal found in Meta’s favour on one of six points.

However, following a review, the CMA has concluded that Meta would be able to increase its already significant market power by denying or limiting other social media platforms’ access to Giphy GIFs, pushing people to Meta-owned sites, which already make up 73% of user time spent on social media in the UK.

It could also change the terms of access - for example, it could require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more data from UK users in order to access Giphy GIFs.

Stuart McIntosh, chair of the independent inquiry group carrying out the remittal investigation, said: "This deal would significantly reduce competition in two markets. It has already resulted in the removal of a potential challenger in the UK display ad market, while also giving Meta the ability to further increase its substantial market power in social media.

"The only way this can be addressed is by the sale of Giphy. This will promote innovation in digital advertising, and also ensure UK social media users continue to benefit from access to Giphy."

Meta bought Giphy in May 2020 for $400m, planning to integrate the business into its Instagram team.