JAKARTA - Britain ordered Facebook's parent company, Meta Inc, to immediately sell Giphy, an animated GIF search engine. That's because the deal could hurt competitors.
The UK's Competition and Markets Authority (CMA) argues that the merger of the two has removed Giphy as a potential challenger in the display ad market.
Meta bought Giphy in May 2020 for $400 million but was asked by CMA to separate the business from June 2020 when regulators imposed an Early Enforcement Order (IEO).
"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.
CMA found that Meta would be able to increase its already significant market power in relation to other social media platforms, by denying or restricting other platforms' access to Giphy GIFs.
"This is driving 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," said CMA.
Meta had proposed other terms of the merger to save the purchase, but CMA refused, arguing it would not fix competition problems and the company could circumvent the requirement.
In addition, citing ARS Technica, Wednesday, December 1, CMA also received information that Giphy is claimed to be a significantly weakened business if it is not purchased by Facebook.
"(However) our view is that, if the merger does not proceed, Giphy will continue to supply GIFs to social media platforms (including Facebook), as it did prior to the merger, and will continue to innovate, develop its products and services, generate revenue and explore (with financial and commercial support from investors) various options to further monetize its products. This will be the case regardless of Giphy's ownership (i.e., whether it operates independently, as before the merger, or in the hands of alternative buyers)," explains CMA.
In response to this, Meta confirmed that it does not agree with the decision and is considering whether to appeal, "Consumers and Giphy are getting better with the support of our infrastructure, talent and resources," said Meta.
"Together, Meta and Giphy will enhance Giphy's products for the millions of people, businesses, developers and API partners in the UK and around the world who use Giphy every day, providing more choice for everyone."
Meta Often Dealing with CMA
Earlier, last month the CMA also fined Meta £50.5 million, alleging the company violated a requirement to provide CMA with regular updates outlining its compliance with the Initial Enforcement Order issued at the start of the investigation.
"Facebook significantly limited the scope of those updates, despite repeated warnings from the CMA," the CMA said at the time.
The report is intended to ensure that CMA has oversight of the company's behavior, including whether Meta has taken any action that could adversely affect the outcome of its investigation.
"This is the first time a company has been found by CMA to have violated the IEO by knowingly refusing to report all required information. Given the multiple warnings given to Facebook, CMA considers that Facebook's failure to comply was intentional," concluded CMA.
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