British government forces Meta to sell Giphy

Why is it important: In 2020, Meta acquired the GIF exchange database Giphy for $315 million. The sale immediately attracted the attention of British regulators, who saw it as a way to limit competition. After a year-long appeal, regulators ordered Meta to sell Giphy.

Giphy is one of the most popular GIF sharing platforms on the web. making report over 200 million monthly active users as of 2017. If you’ve ever tried to send someone a funny cat GIF, chances are you’ve used Giphy for it.

Meta noticed the sheer number of people using Giphy and attempted to buy the company, completing the sale in 2020 for $315 million. The acquisition quickly attracted the attention of UK Competition and Markets Authority (CMA) regulators, who said the deal reduced “competition in social networks and in the media advertising market”. Meta was then ordered by regulators to resell Giphy.

Giphy immediately appealed the CMA decision in November 2021. Surprisingly, company leaders declared that Giphy “didn’t have a meaningful revenue-generating business” without a Meta user base to monetize gifs. They also stated that gifs are “out of fashion” and are “crinkling”. Meta also defended the merger, stating that it believed the Giphy acquisition would provide “greater choice for everyone” and would not harm users or competition.

The appeal went on for almost a year, but the judge ultimately sided with the CMA. Today, the Consumer Protection Supervisory Authority ordered Meta to sell Giphy to prevent an anti-competitive monopoly. Meta made the decision, even going so far as to confirm that the sale would apply worldwide, not just in the United Kingdom. It could be months or even years before Meta completes the Giphy resale, but the British government believes it will be good for consumers and competitors alike.

Now Meta must focus on another government voicing its dissatisfaction with another ransom. The Federal Trade Commission recently sued Meta to block the acquisition of “Within”, the makers of the popular virtual reality fitness app. The FTC says the move is “anti-competitive,” as is Giphy’s purchase of Meta. The main difference between the two situations is that the FTC claims that this purchase attempt may violate US monopoly laws.

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