The Competition and Markets Authority (CMA) said it had
found that last year's acquisition of Giphy would reduce competition between
social media platforms and in display advertising.
Facebook, which was recently rebranded as Meta Platforms,
said it could appeal against the CMA's decision. It has four weeks to appeal.
"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 investigation on Facebook-Giphy for
the CMA.
"By requiring Facebook to sell Giphy, we are protecting
millions of social media users and promoting competition and innovation in
digital advertising."
Facebook said it disagreed with the decision.
"We are reviewing the decision and considering all
options, including appeal," a Meta spokesperson said in a statement.
The CMA in October fined the company a record $70 million
for breaching an order imposed during its investigation into the acquisition,
having said in August that it may need Facebook to sell Giphy.
Competitor access
Facebook bought Giphy, a website for making and sharing
animated images, or GIFs, for a reported $400 million in May 2020 to integrate
the operation with its Instagram photo-sharing app. It has defended the deal to
the CMA.
Another major provider of GIFs is Google's Tenor.
The regulator, however, was concerned that Meta could deny
competitors access to Giphy GIFs, or force the likes of TikTok, Twitter, and
Snapchat to provide more user data to use them.
It also said that innovative advertising services launched
by Giphy in the United States before the deal could have been expanded to other
markets such as Britain, where Meta controls nearly half of the GBP 7 billion
display advertising market.
The CMA has been stepping up regulation of the Big Tech
sector.
Last week Alphabet's Google pledged more restrictions on its
use of data from its Chrome browser to address CMA concerns about plans to ban
third-party cookies that advertisers use to track consumers.
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