No Evidence Of Competitor Harm, Meta Rejects UK Request To Cancel Giphy Acquisition

JAKARTA - The UK recently submitted a request to Meta Platform Inc., to immediately sell Giphy, a GIF search engine to avoid and harm competitors. But the company is now appealing the decision.

At the same time, Meta also said there is no evidence to suggest that the deal poses a threat to its competitors or could impact competition in display advertising.

Previously, the UK Competition and Markets Authority (CMA) ordered Meta to sell Giphy, which it acquired for US$400 million in May 2020. CMA requested Meta after the solution offered by the US-based company did not address its concerns.

However, this is the first time UK regulators have blocked the acquisition of a major digital company, and it signals a step change in the oversight of tech giants.

"We are appealing the CMA's decision regarding Giphy and will ask for the postponement of CMA's order to divest. The decision to block the deal was wrong according to law and fact, and the evidence does not support CMA's conclusion or remedy," Meta said, as quoted by Reuters on Friday, December 24.

It should be noted that CMA was not without reason preventing this acquisition, as half of the traffic to Giphy's huge library of looping videos comes from the Meta platforms Facebook, Instagram and WhatsApp.

Its GIFs are also popular among TikTok, Twitter and Snapchat users. In this case, CMA was concerned that Meta could restrict access or force competitors to provide more user data.

"After 17 months of investigation, we have determined that the only effective way to address the competitive issues we have identified is for Facebook to sell Giphy, in its entirety, to the appropriate buyer," CMA said in a statement.

"This drives more traffic to sites belonging to Facebook, WhatsApp and Instagram which already account for 73 per cent of users' time spent on social media in the UK and they could change access requirements for example, requiring TikTok, Twitter and Snapchat to provide more data. users to access Giphy GIFs," he added.

However, Meta discloses it will not change access conditions for competitors, or collect additional data from the use of GIFs, which do not have online tracking mechanisms such as pixels or cookies.

In addition, CMA refuses Meta's offer to be legally binding, in part because it would require ongoing monitoring. CMA is also concerned that Meta has shut down Giphy's fledgling advertising business, eliminating one of its competitors.

Meta explains, Giphy's advertising business is not working, and if it has the potential to become a major competitor, its model could be replicated by other GIF providers. Therefore, he argues that the deal does not meet the threshold of substantial competition lessons that the CMA requires to block it.