The UK Competition and Markets Authority isn’t happy about Facebook’s acquisition of GIF image provider Giphy, so has demanded its sale.

Scott Bicheno

November 30, 2021

2 Min Read
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The UK Competition and Markets Authority isn’t happy about Facebook’s acquisition of GIF image provider Giphy, so has demanded its sale.

“The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market,” said Stuart McIntosh, Chair of the independent inquiry group carrying out the phase 2 investigation.

“Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs. By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”

Apparently, before the merger Giphy had launched its own advertising services which it was considering expanding to countries outside the US, including the UK. That, it seems, is reason enough for the CMA to conclude the acquisition represents a restriction of competition in the digital advertising market.

The rest of the rationale essentially amounts to a blanket ban on Facebook/Meta making pretty much any digital media acquisitions on the basis that such actions must always reduce competition. Of course this logic could be applied to all mergers, acquisitions and consolidation in general, but in practice it’s a way for regulators to constrain only those companies they deem too big and powerful.

The enforcement of this edict will be interesting to see play out. What if Facebook doesn’t sell Giphy? What can the CMA do? An outright UK ban seems unlikely so we’re probably looking at fines. It does seem strange that a single country can poke its nose into a foreign company’s business so forcefully but, then again, the UK is entitled to object to M&A that it considered against the public interest.

So, to recap, the mere fact that Giphy may, one day, have sold digital advertising in the UK is reason enough for the CMA to compel not just its sale by Facebook, but only to a buyer the CMA approves of. This does feel like an exceptional imposition by a regulator into the workings of the market but such is the hostile current political climate towards tech giants that gestures like this, which essentially seek to shut the stable door after the M&A horse has bolted, are likely to receive political and public support.

Announcing the decision via a GIF, however, was just plain cheeky.

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About the Author(s)

Scott Bicheno

As the Editorial Director of Telecoms.com, Scott oversees all editorial activity on the site and also manages the Telecoms.com Intelligence arm, which focuses on analysis and bespoke content.
Scott has been covering the mobile phone and broader technology industries for over ten years. Prior to Telecoms.com Scott was the primary smartphone specialist at industry analyst Strategy Analytics’. Before that Scott was a technology journalist, covering the PC and telecoms sectors from a business perspective.
Follow him @scottbicheno

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