The order for Meta to sell the Giphy platform for animated images was reissued by the competition watchdog in the United Kingdom.
After going back and forth with the tech giant since its decision was first announced the previous year, the Competition and Markets Authority (CMA) said that this ruling was final.
The CMA concluded that the takeover of the website that allows users to create gifs could be detrimental to advertising and social media users.
A spokesperson for Meta stated that the company “accepted” the decision but that it was “disappointed.”
The ruling marks the first time the United Kingdom has prevented an acquisition by a major technology company, indicating a new resolve to scrutinize digital business transactions.
In the year 2020, Meta completed the acquisition of Giphy, making it the largest supplier of animated gifs to social networks like Snapchat, TikTok, and Twitter.
After conducting an investigation into the potential sale, the CMA issued its initial decision in November 2021, which ordered Meta to get rid of Giphy.
During the investigation, Meta, which was formerly known as Facebook Inc., was issued a record-setting fine of £50.5 million for refusing to comply with the CMA.
Following the acquisition of Giphy, Meta had high hopes that it would be easier to find gifs and stickers on its various social networks, including Instagram, WhatsApp, and Facebook.
Despite Meta’s assertions that Giphy would be “openly available” to other social networks, the CMA investigation concluded that the buyout would have a negative impact on competition in the social media and advertising industries.
Meta filed an appeal against this decision, but the Competition Appeal Tribunal ruled in favor of the CMA in July, finding that the CMA was correct on all grounds, with the exception of the one that related to third-party confidential information.
Following the publication of that finding, the CMA stated that it had reviewed its initial decision–that Meta would be required to sell Giphy–and that it was maintaining its position.
It expressed concern that the deal would not only restrict users’ ability to choose which social media platforms to use but also reduce the innovation in digital display advertising in the UK.
According to Stuart McIntosh, the chair of the independent inquiry group that is carrying out the investigation for the CMA, Meta has no choice but to sell Giphy.
“This deal would significantly reduce competition in two markets,” he said. “This would be a terrible idea.”
It has already resulted in the removal of a potential challenger in the UK display ad market while also giving Meta the ability to further increase its substantial market power in social media. “It has already resulted in the removal of a potential challenger in the UK display ad market.”
The social networking site issued a statement in which it acknowledged the decision and added the following: “During this period of transition for their company, the Giphy team has our gratitude, and we wish them the best of luck in their endeavors.
“We will continue to evaluate opportunities, including those that involve the acquisition, to bring innovation and choice to a greater number of people in the United Kingdom and throughout the world.”
According to Paul Stone, a partner at the law firm Charles Russell Speechlys, who spoke with the media: “The significance of the decision made by the CMA lies in the fact that it highlights the body’s concerns regarding the impact that the deal will have on future innovation in digital advertising.
“This seems to be the key to the CMA’s approach to regulating big tech in the UK, where maintaining competition between already established players in the sector can be at least as important as preserving competition from small but potentially significant future challengers,”
