Facebook’s (NASDAQ:FB) owner, Meta, has been told it must sell Giphy, a GIF-sharing platform. This came directly from the competition watchdog in the United Kingdom. The CMA (Competition and Markets Authority) claimed that the deal could potentially harm U.K advertisers and social media users.
Meta does not agree with this decision by the CMA and is thinking about an appeal. The U.K-based competition watchdog claims that the Giphy acquisition would help reduce competition between social media apps and platforms.
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A panel from the CMA found that Meta’s Facebook platform would be able to significantly boost its already strong market share when it comes to other social media apps and platforms by limiting or denying the others access to GIF-sharing via Giphy.
This would eventually send way more traffic to sites owned by Facebook, such as Instagram, WhatsApp, and Facebook itself, which already control around 73% of the time United Kingdom users spend on social media.
Meta would also have the power to restructure the terms of access when it comes to GIF-sharing via Giphy. For instance, it might end up requiring the likes of Snapchat, Twitter, and TikTok to provide the platform with more user information if they want to access Giphy’s GIFs.
How could this affect advertising?
Before this deal, Giphy had already launched advertising services of its own. In fact, it was thinking about expanding to markets outside the United States.
The Competition and Markets Authority found that the platform’s advertisement services would’ve been able to effectively compete with display ad services from Facebook. All this while still encouraging innovation and enhancements from the other social media advertisers and sites.
Facebook closed Giphy’s ad services when the deal was being made. The Competition and Markets Authority was concerned about this, especially because Meta controls almost half of the $9.4 billion display advertising market in the United Kingdom. A Meta spokesperson said:
We disagree with this decision. We are reviewing the decision and considering all options, including appeal.
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