CMA set to block Facebook acquisition of GIF platform Giphy
By Josh White
Date: Monday 29 Nov 2021
(Sharecast News) - Facebook's acquisition of animated GIF platform Giphy is set to be blocked by the UK's competition watchdog, it was reported on Monday, which would mark the first time the Competition and Markets Authority (CMA) puts the brakes on a Big Tech deal.
According to the Financial Times, who cited sources close to the matter, the CMA was preparing to reverse the deal following an investigation that was launched in June 2020.
Facebook's parent company, which recently rebranded as Meta, agreed to buy Giphy in a deal reportedly worth $400m last May.
The CMA had provisionally ruled in August that Meta should be forced to sell Giphy, arguing that Facebook already controlled between 40% and 50% of the UK display advertising market through its main platform, and subsidiaries including Instagram and WhatsApp.
"While our investigation has shown serious competition concerns, these are provisional," said chair of the investigation, Stuart McIntosh, at the time.
"We will now consult on our findings before completing our review.
"Should we conclude that the merger is detrimental to the market and social media users, we will take the necessary actions to make sure people are protected."
Meta has fought the CMA's findings, however, accusing the regulator of "extraterritorial overreach" and "sending a chilling message" to entrepreneurs that they would not be able to sell start-ups.
"We disagree with the CMA's preliminary findings, which we do not believe to be supported by the evidence," Facebook said in August.
"As we have demonstrated, this merger is in the best interest of people and businesses in the UK - and around the world - who use Giphy and our services.
"We will continue to work with the CMA to address the misconception that the deal harms competition."
The stakes were raised in October, however, when the CMA fined Mets £50.5m for a "major breach" of the requirement that Giphy be operated separately from the rest of the company for the duration of its investigation.
According to the watchdog, Meta "consciously refused to report" compliance information to the CMA, leading to the largest fine ever for such a breach.
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