UK Competition and Markets Authority (CMA) today required Facebook to sell Giphy. The CMA concluded that Facebook’s acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market.
CMA says Giphy acquisition by Facebook can harm social media users and UK advertisers. Facebook acquired Giphy in 2020, in a deal reportedly worth $400 million.
Last month, the CMA fined Facebook in £50.5 million for breaching an order during its investigation into Facebook’s purchase of Giphy. According to the CMA, Facebook refused to report all the required information on this investigation.
In the investigation, the CMA discovered Giphy’s advertising services had the potential to compete with Facebook’s own display advertising services. Recently, Giphy launched advertising services, allowing companies to promote their brands through visual images and GIFs.
After acquiring Giphy, Facebook terminated Giphy’s advertising services. And the CMA says this has removed an important source of potential competition for Facebook, a company that controls nearly half of the £7 billion display advertising market in the UK.