Anti Competition: UK Regulators Order Facebook To Sell Giphy

Meta, Facebook’s parent company, has been instructed to sell off its GIF-sharing platform GIPHY by British regulator – The Competition and Markets Authority. The announcement came on Tuesday and Meta, founded by Mark Zuckerberg, is planning to appeal as the company completely disagrees with the decision. According to The Competition and Markets Authority, the reason for demanding that GIPHY be sold is because Meta’s acquisition of the online database and search engine platform could be detrimental to social media users and advertisers in the UK in the long run. According to the regulator, Meta’s acquisition of GIPHY would reduce competition between social media platforms, adding that Meta’s acquisition of the platform already took out GIPHY as a potential challenger in the display ad market.

According to the conclusion of a panel, Meta could use GIPHY to strengthen its already rooted market dominance and put other social market platforms at a disadvantage by limiting or even prohibiting their access to GIFs provided by GIPHY. In other words, Meta could monopolize GIPHY and use it to have an edge over other social media platforms.

What the “monopolization” of GIPHY by Meta could do for the company is quite endless. Apart from cutting off competition, Meta could use GIPHY to gain more traffic across all its social platforms – Facebook, Instagram and WhatsApp. In the UK alone, 73 percent of time spent on social media by people are spent on platforms owned by Meta. Meta could take it up a notch by changing the terms of access to GIPHY and requesting that other social platforms provide more user data for access to GIFs provided by GIPHY.

GIPHY was founded in February 2013 and is an American online database and search engine that allows users to search for and share short looping videos with no sound, according to Wikipedia. Facebook, now Meta, acquired the platform on the 15^th of May 2020 for about $400 million.

Before its acquisition by Meta, GIPHY was planning to expand to countries outside of the US after it launched its advertising services. With its ad services, brands could make promotions through visual images and GIFS. But Facebook happened…

According to the British regulator, GIPHY’s ad services, on its own would have been a strong competitor against Facebook/Meta’s. It would have provided other platforms with the confidence they needed against big names like Meta. Following its acquisition, Meta shut down GIPHY’s ad services. According to what the Competition and Markets Authority said, this was a huge cause for concern, especially because Meta is headlining the ad market in the UK; it controls almost half of the $9.4 billion display ad market in the UK.

“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising”, Stuart McIntosh, the Chairperson of the independent inquiry group in charge of the investigation said, hinting that the deal has already removed a potential challenger in the display ad market.

“We disagree with this decision. We are reviewing the decision and considering all options, including appeal”, a Meta Spokesperson said. It is still not clear how long Meta has to sell GIPHY but an appeal is expected to take place soon.