Facebook appeals UK regulator’s order to divest Giphy acquisition

Facebook Giphy appeal Image credit: viewimage / Shutterstock

Meta, the parent company of Facebook, is appealing against a ruling by the UK’s competition watchdog that it must unwind its acquisition of GIF company Giphy.

Last month the Competition and Markets Authority (CMA) ordered Meta to reverse its purchase of Giphy, which it bought for $400m in May 2020.

Facebook, which recently rebranded to Meta, planned to integrate the GIF-making company into its photo-sharing app Instagram.

New York-based Giphy’s database allows users to share GIFs – looping animated images – via its own website or app or through other platforms such as Facebook or Twitter.

“We are appealing the CMA’s Giphy decision and will seek a stay of the CMA’s order to divest,” a Meta spokesperson said on Thursday.

“The decision to block the deal is wrong on the law and the facts, and the evidence does not support the CMA’s conclusions or remedy.”

The CMA’s decision marked the first time a competition regulator reversed a Big Tech acquisition that has already gone through.

Meta had previously offered mitigations – such as a legally binding promise to not limit competitors’ access to Giphy and to not collect data from GIFs – but the CMA rejected them.

The CMA said that before the Facebook merger, Giphy had “launched innovative advertising services which it was considering expanding to countries outside the US, including the UK”.

Meta said the evidence does not support the CMA’s findings that the acquisition could affect competition in display advertising.

Giphy is the largest provider of GIFs, with more than 700 million people viewing GIFs via its database every day. Giphy is also integrated with apps such as TikTok, Tinder and Slack.

“The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market,” Stuart McIntosh, chair of the independent inquiry group conducting the CMA’s investigation into Giphy, previously said. “By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”