The UK’s Competition and Markets Authority (CMA) has ordered Meta Platforms to sell its graphics maker Giphy to ensure fair competition in the social media and display advertising market.
Meta only completed the takeover of Giphy just last year, but CMA ruled, after a long investigation, that the tie up reduces competition in the social media and display advertising markets.
The probe was commenced by the CMA shortly after the deal completed in May 2020. Facebook was then blocked from integrating assets with its subsidiary Instagram while the investigation took place.
The CMA continued to refer to the recently-rebranded company as Facebook in its documentation.
It explained an independent panel reviewing the merger concluded Facebook would be able to increase its already significant market power by denying or limiting other platforms’ to access Giphy’s Graphic Interchange Format (GIF) images and drive more traffic to its own sites including WhatsApp and Instagram.
The CMA added Facebook could change terms of access by requiring rivals such as TikTok and Twitter to provide more user data in order to access Giphy. The panel also raised concerns about the removal of Giphy in the display advertising market, which it asserted would have been a competitor to Facebook had it remained a separate company.
Stuart McIntosh, chair of the independent enquiry group, said: “By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”
The CMA warned Facebook it may have to unwind the takeover, a stance Facebook reportedly rubbished, raising questions about the regulator’s power to force a sale.
In October, the CMA fined Facebook £50 million after ruling it failed to meet certain compliance rules after the deal was completed.