Facebook owner Meta ordered to sell Giphy by UK competition watchdog

Giphy logo shown on a mobile phone in front of a laptop screen showing the Meta logo
The company bought the animated GIF website last year for $587 million. Photo credit: Getty Images

The UK's competition watchdog has instructed Facebook's parent company Meta to sell Giphy, the popular animated GIF platform.

The Competition and Markets Authority (CMA) said the deal could harm social media users and advertisers in the UK and allow the company to increase its already dominant market position.

Meta purchased Giphy in May 2020 for a reported NZ$587 million with the aim of integrating GIFs into its own platforms.

The CMA had earlier fined the company NZ$102.6 million, accusing it of breaching an order and ignoring warnings related to the purchase of Giphy.

"The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market," Stuart McIntosh, chair of the independent inquiry group heading the CMA probe, said in a statement.

"Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors; access to Giphy GIFs.

"By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising."\

Meta disagreed with the CMA's decision but hasn't yet decided on its next step.

"We are reviewing the decision and considering all options, including appeal," a Meta spokesperson said in a statement.

As well as potentially being able to deny or limit other platforms access to Giphy, the CMA was also concerned Meta could instead force those platforms to provide more user data in order to access the gifs.

"Particularly concerning" was the termination of Giphy's advertising services at the time of the merger, given Facebook already controlled nearly half of the NZ$13.6 billion display advertising market.

The CMA found those services had the potential to compete with Facebook's own, which was likely to encourage more innovation in the market.

"After consulting with interested businesses and organisations and assessing alternative solutions put forward by Facebook the CMA has concluded that its competition concerns can only be addressed by Facebook selling Giphy in its entirety to an approved buyer," the CMA concluded.