London, Nov 30, : On Tuesday, the UK Competition and Markets Authority ordered Meta, Facebook’s parent company, to sell Giphy online search engine and database.The $315 million acquisition could cause harm to UK advertisers and social media users. Facebook had purchased the online GIF platform in May 2020.
The UK anti-competition watchdog ruled Facebook’s acquisition Giphy would reduce competition among social media platforms.
Giphy was also removed from the market as a potential threat by the deal.
“The tie-up between Giphy and Facebook has already eliminated a potential threat to the display advertising market.
It will allow Facebook to increase its market power in social media by controlling competitors’ access Giphy GIFs.This is according to Stuart McIntosh (chair of the independent inquiry group).
He stated that Giphy must be sold by Facebook in order to protect millions of users on social media and promote competition and innovation in digital advertising.
Independent panel that reviewed the merger concluded that Facebook could increase its market power relative to other social media platforms.
This would allow it to deny or limit access to Giphy GIFs on other platforms, driving more traffic and users to Facebook-owned sites, such as Instagram, WhatsApp, and Facebook.These platforms already account for 73% of social media time in the UK.
The terms of access will be changed by the social network, which will require TikTok and Snapchat to provide more user information in order to access Giphy GIFs.
Giphy had previously launched innovative advertising services before the merger.
It was looking at expanding these services to other countries, including the UK,
Giphy’s services enabled companies such as Pepsi and Dunkin’ Donuts to promote their brands using visual images and GIFs.
CMA concluded that Giphy’s advertising services could compete with Facebook’s display advertising services.
Meta was fined by the UK watchdog for failing to provide updates proving compliance in order to continue competing with GIF and avoid further integration during the investigation.
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