Meta has not managed to get away with it. Facebook’s parent company will have to sell Giphythe “Google of GIFs” that it had bought for $400 million in 2020. This move comes after the UK Competition and Markets Authority (CMA) determined that the operation breached competition laws and that the only way to address this problem was to sell the platform.
“We are disappointed by the CMA’s decision, but accept today’s ruling as the final word on the matter. We will work closely with the CMA to divest from Giphy.” a company spokesman told Reuters. Asked about the scope of the decision, he pointed out that “it will be applied worldwide”, which means that the social media giant will sell all of Giphy.
Zuckerberg loses an important piece of his strategy
Purchase agreements of a certain level are subject to the approval of regulators in different parts of the world. In the case of the purchase of Giphy by Meta (then Facebook), the UK CMA concluded that the operation reduced competition in the social media and advertising markets. In that sense, he ordered the sale to another company, which led Meta to appeal the ruling.
On appeal things did not go well for Meta. The Competition Appeal Court (CAT) only ruled in favor of the company in five of the six contested reasons, giving the CMA free rein to carry out a final review and further complicating the outlook for the Facebook parent company. Thus, this Monday the UK Competition Authority issued its final decision: to sell all of Giphy to a buyer approved.
In this way, Meta loses what has been considered by experts as a “Trojan horse” whose main mission was to collect data and detect trends in all types of markets. This was possible because Giphy was present in many popular applications thanks to its API. Every time a user searches for or sends a GIF, a ‘beacon’ is generated to track how and where it is used.
With this huge amount of data, Meta could have further consolidated its advertising platform. In fact, after the purchase, the company closed its independent ad service and integrated it with Meta’s. This was also a matter of concern for the CMA, which felt that the social media giant already controlled more than half of UK display advertising, valued at $8 billion.
The CMA is also investigating other operations. For example, the purchase of Activision Blizzard by Microsoft. The regulator believes the acquisition could harm PlayStation and other subscription services. This has caused a forceful answer by Microsoft assuring that the CMA “is incorrectly based on self-serving statements from Sony that significantly exaggerate the importance of ‘Call of Duty'”.
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