Facebook parent company Meta is forced to sell Giphy

Mia Gindis, Opinions Editor

Technology conglomerate Meta Platforms Inc., formerly known as Facebook, lost its fight to retain animated image database Giphy.

The U.K. government’s Competition and Market Authority ruled on Oct. 18 that the acquisition would hinder competition in the display advertising market.

The CMA’s move marks the first time regulators successfully challenged the economic dominance of the Big Tech company, which owns social media platforms Facebook and Instagram.

The CMA forecasted that Meta’s takeover of the GIF-sharing platform would limit other social media platforms’ access to GIFs, thereby making these platforms less attractive to the average consumer.

“We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter,” a Meta spokesperson said in an emailed statement, as reported by TechCrunch.

Meta controls nearly half of the United Kingdom’s display advertising market, which is worth £7 billion or about $8 billion. Additionally, 73% of time spent on social media by U.K. users is spent on Meta-owned websites.

The CMA also expressed concern that Meta’s takeover could result in a change in the terms of access. This would require Giphy customers — such as Snap Inc., Twitter Inc. and TikTok — to provide more data from U.K. users in exchange for access to GIFs from Giphy.

Giphy tried to obscure the significance of Meta’s takeover in an August court filing, arguing that there is a global decline in the popularity of GIFs.

“[GIFs] have fallen out of fashion as a content form, with younger users in particular describing gifs as ‘for boomers’ and ‘cringe,’” Giphy said, according to the CMA filing.

Meta added that Giphy saw a sharp downturn in the number of GIF uploads in the past two years.

The CMA refuted this argument, citing the billions of global internet searches Giphy’s GIFs continue to rack up on a monthly basis.

The regulator also implied that Giphy squashed its own potential in digital advertising in its justification for unwinding the acquisition.

Prior to Meta’s takeover, Giphy had plans to expand its innovative services to other countries, such as the United Kingdom.

These services granted businesses, including PepsiCo, Inc. and Dunkin’, the opportunity to promote their brands through eye-catching images and GIFs.

“The CMA has concluded the only way to avoid the significant impact the deal would have on competition is for Giphy to be sold off in its entirety to an approved buyer,” the CMA said in the filing.

It is not yet known which company will buy Giphy.

Meta will continue pursuing future acquisitions despite the ruling, which likely won’t be the last of its kind.

The Federal Trade Commission recently sued Meta to block its acquisition of a virtual reality technology company known as “Within Unlimited.” The FTC claimed that the acquisition could give Meta the means to establish a “virtual reality empire.”

Global regulators, such as the CMA and FTC are taking up arms to defend consumers and smaller companies against Big Tech.

The European Commission currently has several ongoing high-profile investigations into Meta, Alphabet Inc.- owned Google and Apple Inc. over breaches of antitrust laws.