The United Kingdom’s Competition and Markets Authority (CMA) says that Meta’s purchase of GIPHY restricts free-market competition.
The UK’s business competition regulator, the CMA, has directed Facebook to sell off GIPHY, a project Meta acquired in May last year. According to the authority, Meta’s ownership of GIPHY limits competition between social media platforms.
Earlier this week, an independent CMA panel concluded that “Facebook would be able to increase its already significant market power in relation to other social media platforms by denying or limiting other platforms’ access to Giphy GIFs, driving more traffic to Facebook-owned sites, or changing the terms of access by, for example, requiring TikTok, Twitter, and Snapchat to provide more user data in order to access Giphy GIFs.”
The panel’s investigation identified increased data access as a cause for concern and believes that the ad tools GIPHY has been working on have the potential to compete with Facebook’s own display ad services. For the record, Facebook shut down GIPHY’s ads services shortly after acquiring the platform.
With these concerns for competition out in the open, the UK authority has ruled that Facebook should sell GIPHY “in its entirety to an approved buyer.”
Meta has expressed its disagreement with the ruling and hinted that it may soon appeal on the basis that “both consumers and Giphy are better off with the support of our infrastructure, talent, and resources.”
Furthermore, it stated that “Meta and GIPHY would enhance GIPHY’s product for the millions of people, businesses, developers and API partners in the UK and around the world who use [it] every day, providing more choices for everyone.”
If Meta loses its appeal, the ruling will mark the first regulatory intervention of this type, possibly making it obligatory for tech giants to get the government’s approval before similar acquisitions.
Meta has been under scrutiny over two other major acquisitions in the past, namely when it squeezed out the competition by buying competing platforms WhatsApp and Instagram.
According to Techcrunch, the tech giant also apparently used a data-tracking program to detect and buy rising apps among young users before they could threaten its market dominance.
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