UK's CMA orders Meta to sell Giphy, after finding the deal could harm rival platforms by denying access to GIFs, social media users, and UK advertisers

After its investigation found it could harm competition — The UK's competition regulator has officially ruled that Facebook parent … Source: GOV.UK .

The Verge 2021-12-01 Jon Porter

Context & Ripple Effects

The order follows the CMA’s March review of Facebook’s acquisition, which identified concerns in digital advertising and the supply of GIFs, and its August provisional finding that competitors could lose GIF access. Reports a day earlier had already indicated the regulator was preparing to block the deal.

The formal remedy turns that competition theory into an ownership separation: Giphy cannot remain inside Meta when the CMA believes control could restrict rival platforms and affect UK advertising competition.

First-order effects

Meta must sell Giphy under the CMA’s order, ending its ability to control the GIF provider through the acquisition.
Rival social platforms retain access to Giphy rather than depending on Meta to supply a service the regulator viewed as competitively significant; UK advertisers are among the protected constituencies.

Second-order effects

Meta loses a potential lever over rival platforms’ GIF access and a route to combine Giphy with its own advertising position, the two areas raised in the CMA’s earlier competition review.
Other platforms that rely on Giphy avoid having a key content interface governed by a direct competitor, reducing the pressure to seek alternative GIF supply solely because of Meta ownership.

Third-order effects

The case establishes ownership separation as the CMA’s remedy where a platform acquisition can make a shared digital input conditional on a rival’s control.
If applied consistently, this approach would put greater weight on whether acquisitions alter competitors’ access to platform inputs, not only on immediate consumer-facing overlap.

The trend: Digital-platform merger scrutiny is increasingly focused on preserving rivals’ access to shared services that an acquiring platform could otherwise govern.

Discussion

@cmagovuk @cmagovuk on x
We've directed #Facebook to sell Giphy after finding the takeover could reduce competition between social media platforms and increase Facebook's already significant market power. https://twitter.com/...
@adamkovac Adam Kovacevich on x
I would be surprised if the UK government could find more than 50 consumers who feel more “protected” today because they've blocked FB's Giphy acquisition. Giphy no more has a monopoly over GIFs than Chipotle has a monopoly over burritos. https://twitter.com/...
@s8mb Sam Bowman on x
The first could be remedied by just requiring FB to keep Giphy accessible by competitors. That would also be a mistake IMO: losing Giphy isn't going to kill Twitter, Snapchat, etc, and if FB closes their access to Giphy, there's little stopping a replacement from popping up.
@tomwarren Tom Warren on x
@Psythor not a dumb Q, but I believe the UK regulator could force Facebook to stop operating in the UK. Given the investments and market, that's not something they're likely to do for an acquisition as small as Giphy. It really feels like testing the waters ahead of Nvidia
@villeaula Ville Aula on x
Finally some #digitalcompetition action from @CMAgovUK! Time is long due for it. Everyone will be better off when #platforms cannot buy their rivals just before they become truly competitive. We don't need miracles, we need enforcement and competition https://www.gov.uk/...
@felipeovalle Felipe Ovalle on x
@CMAgovUK You made a GIF with Facebook UI to announce this. Love the irony :p
@adamkovac Adam Kovacevich on x
It seems clear that UK's @CMAgovUK fell prey to the same temptation that the @FTC has: seeking a FB scalp, regardless of how strong the facts and law are.
@morningbrew @morningbrew on x
FB: *Buys Instagram* Regulators: Okay we'll allow it. FB: *Buys WhatsApp* Regulators: Ugh fine, but we don't like it. FB: *Buys Oculus* Regulators: lmao you can have that one FB: *Buys Giphy* Regulators: OKAY NOW HOLD UP https://twitter.com/...
@alecmuffett Alec Muffett on x
@infil00p What's going to happen if/when Giphy is sold off? Facebook will roll their own. So will any large competitor. What will happen to Giphy? Nobody cares. Most especially the CMA who will only care that they have had a victory against “big tech”.
@howardlindzon HowarDAO on x
MetaFace or FaceMeta Or Metabook forced to sell Giphy because you know controlling Gif's is important in a meme economy... https://www.theverge.com/... We are all going to hell $fb
@alecmuffett Alec Muffett on x
I feel sorry for the British #unicorns which were founded on the assumption of being “bought out” as an exit strategy, rather than expecting to have to deliver customer value over the long-term. Now they have to face the giants competing against *them*. https://www.gov.uk/...
@jbenton Joshua Benton on x
Not at the tippy-top of my personal antitrust to-do list, but okay https://twitter.com/...
@alison_mcgovern Alison McGovern on x
Interesting. Question is whether we really want to back good competition with up to date legislation. Creative industries need to thrive. Monopoly power only gets in their way. https://twitter.com/...
@antondinev Anton Dinev on x
And the @CMAgovUK is using a GIF to deliver the news. 🧐 https://twitter.com/...
@danprimack Dan Primack on x
When we first broke news of this deal, we noted that regulators were gonna take a good, hard look at it. FB sources told me I was nuts. https://www.axios.com/... https://twitter.com/...
@cmagovuk @cmagovuk on x
Facebook will also be required to reinstate the innovative advertising services that Giphy offered before the merger. Read more: https://www.gov.uk/... #DigitalAdvertising
@alexmartin Alexander Martin on x
Sky News understands that Meta will appeal the decision, although the formal process not yet begun. It has four weeks to do so and the appeal would first go to a CMA tribunal. After that Meta could potentially challenge that ruling in the UK courts, but only on points of law. htt…
@jamesrbuk James Ball on x
Suspect this might prove to be overreach on the CMA's part. Be interesting to watch. https://twitter.com/...
@psythor James O'Malley on x
Maybe this is a dumb question but I don't fully understand how a British regulator can compel an American company to do this. If (for example) the US and EU said it was fine, what recourse would Britain have? https://twitter.com/...
@darrenpjones Darren Jones MP on x
A big, bold move from the @CMAgovUK today. On @CommonsBEIS we're looking at post Brexit competition policy and the role of the Digital Markets Unit. Will be interesting to see how this runs 👇 https://twitter.com/...
@toadsanime Ryan Brown on x
The UK competition regulator has demanded that Facebook sells Giphy as the acquisition has been deemed anti-competitive. This is a bold precedent not yet applied to a tech giant, let alone a US company's acquisition of another US company. Will they listen? https://twitter.com/...
@martinsfp Martin Sfp Bryant on x
This is what I don't understand. Giphy might dominate access to GIFs right now, but a decent rival could easily spin up if the need was there. GIFs aren't proprietary tech. https://twitter.com/...
@s8mb Sam Bowman on x
Basically, there are two theories of harm. One is that FB buying Giphy would deprive sites like Twitter of access to its GIF library; the other is that someday Giphy might be a competitor of FB's in digital ads (thanks to those innovating looping ads). Both seem pretty weak, IMO.
@s8mb Sam Bowman on x
The second is, as I say in the previous thread, an argument that “proves too much”. The CMA wants to have it both ways: Facebook is both a monopolist that doesn't compete with, eg, Google display ads, but ALSO thinks that Giphy would be a serious competitor of FB's if given time.
@s8mb Sam Bowman on x
Thread on Facebook/Giphy being blocked from the provisional findings. Today's final report still includes the funny idea that Giphy's ad business is particularly promising because GIFs loop, meaning that “the ad might be seen by users a number of times” 😆 https://twitter.com/...
@tomwarren Tom Warren on x
Interesting decision by the CMA here, ahead of the big Nvidia ruling. It means the UK regulator has decided a US company must sell the US company it acquired. Meta says it's “reviewing the decision and considering all options, including appeal.” https://twitter.com/...
@basche42 @basche42 on x
Fiddling while Rome burns. *this* is what you hit Meta with? Really? https://twitter.com/...
@jamestitcomb James Titcomb on x
admirable though https://twitter.com/...
@jamestitcomb James Titcomb on x
“The supply of GIFs” https://twitter.com/...
@psawers Paul Sawers on x
Not sure how this is going to end, but I'm pretty certain that Facebook (sorry, “Meta"), won't be selling Giphy because the CMA said so. https://twitter.com/...
@javierespft Javier Espinoza on x
FT story with @KateBeioley_FT UK regulator expected to block Meta's Giphy deal \\ Move would be the first time the competition watchdog has reversed a Big Tech acquisition https://www.ft.com/...

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