UK Regulators Step in To Unwind Facebook-Giphy Merger

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.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS22101902