UK regulator orders Facebook owner to sell Giphy

The Competition and Markets Authority confirmed its preliminary view that the purchase of Giphy by the owner of Facebook could harm social media users and UK advertisers. Facebook changed its name to Meta in October.

Facebook bought Giphy in 2020 for $315m to merge the GIF provider with its Instagram business. The deal combined the biggest social media group in the world with the largest supplier of GIFs, which are animated images used to accompany social media posts.

The CMA said before the takeover Giphy was an innovator in advertising and had the potential to compete with Meta's advertising, which makes up almost half of the UK display advertising market.

Stuart McIntosh, who chaired the CMA investigation, said: "The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market. Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors' access to Giphy GIFs.

"By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising."

The CMA's ruling is a rare example of a non-US regulator trying to undo a big technology deal. Scrutiny of Silicon Valley's acquisitions has intensified as authorities have woken up to the power wielded by Facebook, Alphabet, Amazon and other tech giants.

The investigation has been acrimonious with Meta accusing the CMA of "fundamental errors of law and fact". The CMA fined Meta £50.5m in October for breaching an order that it should keep Giphy separate during the inquiry.