Facebook Forced to Sell Giphy
Facebook parent Meta Platforms (META) has owned the gif-sharing company Giphy since 2020, after acquiring it for $315 million. But last November, the Competition and Markets Authority – or CMA, a UK regulatory body – demanded that Meta sell Giphy, citing anti-competitive behavior.
This court hearing was recently finalized. A Meta spokesperson admitted defeat, stating they were “disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter.”
Facebook now must begin the process of selling Giphy to a suitable buyer.
Now There’s a Problem?
The CMA stated that it would create substantially less competition in the UK’s social media and advertising market if Facebook were allowed to acquire Giphy. This likely came as a shock to Meta’s management, seeing as this was hardly the company’s biggest acquisition.
In the past, Meta acquired Instagram for $1 billion, Oculus VR for $3 billion, and WhatsApp for $22 billion. All three deals were allowed to proceed. Other large tech companies have made similar acquisitions. For example, Alphabet (GOOGL), parent of the world’s largest search engine, was allowed to purchase YouTube for $1.65 billion in 2006. YouTube is now the world’s second largest search engine.
The Giphy determination marks the first time that a global regulator has nixed an acquisition involving a major technology company.
Coming For Big Tech
As US tech companies expand their reach around the world, European regulators are taking the initiative to slow them down.
Both the CMA and the European Commission are actively investigating competing tech giants like Google and Apple (AAPL). These two regulating bodies also plan to enact larger fines against tech giants concerning breaches of competition law.
This initiative from European regulators could encourage US lawmakers to take similar measures. In the short-term, this news means that you’ll no longer be able to send Giphy gifs through Meta-owned platforms. But, in the long-term, it will hopefully lead to more competition – and more privacy – in the tech industry.
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