Facebook, which was rebranded as ‘Meta’ in October, acquired GIF production and sharing tool Giphy in May 2020. Giphy, which is aimed to be integrated with social media applications under the roof of the company, especially Instagram, cost 400 million dollars. The plans of Meta, where Mark Zuckerberg is the CEO, may fail.
According to the information obtained by the Financial Times from sources close to the subject, the UK’s competition authority is preparing to block the Meta-Giphy agreement. The Competition and Markets Authority (CMA), which has been examining the competition problems that the agreement may create for a long time, thinks that the merger of Meta’s social networks and Giphy is anticompetitive.
Giphy could give Facebook an unfair advantage
The UK Competition and Markets Authority (CMA) described Meta’s (then Facebook) acquisition of Giphy in August 2021 as “uncompetitive”. He stated that if the app falls under Facebook’s control, the company will gain an unfair advantage over rival social media platforms that use Giphy, such as Snapchat and TikTok.
CMA fined Facebook $70 million in October as part of its ongoing investigation. The reason for this penalty is that the company did not provide enough information on how to protect the competition after purchasing the Giphy application. Facebook appealed the fine, saying it did its best to comply with the CMA’s requirements.
A Meta spokesperson said in a statement that they disagreed with the CMA, saying:
We disagree with the preliminary findings of CMA that we do not believe are supported by the evidence. As we have shown, this merger is in the interests of the individuals and businesses that use Giphy and our services in the UK and around the world. We will continue to work with the CMA to address the misconception that the deal harms competition.
According to the news of Business Insider, the Competition and Markets Authority will announce its new decision by 1 December. If a good or service provided in the UK controls more than 25 percent of the market in the country, the CMA has sanctioned power over the purchase. According to the competition authority’s findings, Meta – Giphy combined will dominate 80-90 percent of the UK’s searchable animated sticker pack market.
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