Meta Selling Giphy to Shutterstock at a Loss
Meta is selling Giphy to image service Shutterstock for $53m. It means that it took over a $260m loss. The deal was first blocked by the regulators.
The owner of Facebook acquired Giphy in November 2021 for $315m. However, the acquisition wasn’t completed because it was blocked by the UK’s Competition and Markets Authority (CMA).
The regulator stated that blocking the acquisition would protect social media users. It would also stop the social network from increasing its power in the field.
Shutterstock will pay cash for the acquisition to complete. The agreement involves ensuring continued access to Meta’s platforms. Giphy’s existing user base can also continue to access the platforms.
“Through the Giphy acquisition, we are extending our audience touch points beyond primarily professional marketing and advertising use cases and expanding into casual conversations.” – Shutterstock
This is an exciting next step for Shutterstock as it is traversing itself to being an end-to-end creative platform. Through the acquisition, Shutterstock can extend its audience beyond professional marketing and advertising use. With GIPHY, users can express themselves through GIF and sticker content.
Audience Losing Interest in GIFs
Unfortunately, there is a decreasing interest in GIFs as a form of self-expression on the Internet. Last year, Meta appealed to the CMA. It warned that gifs have lost their appeal. Younger users are no longer a fan of them. They even described gifs as a content form for boomers.
“Content creators are also finding less value in GIFs, with GIPHY experiencing a % drop in total GIF uploads between October 2020 and May 2022. GIPHY also experienced a % drop in the number of accounts created by content partners between October 2022 and May 2022, and a % drop in content partner uploads between March 2021 and May 2022.” – Giphy
Meta also warned that Giphy would not survive as an independent business. It said that the only buyers that are interested in Giphy’s business will be either weak or inappropriate. Even though Amazon, Twitter, Adobe, and other tech giants expressed their interest in purchasing the business, the discussions did not flourish.
Shutterstock also said that buying Giphy will not prove revolutionary in the short term. It may add minimal revenue this year.
Giphy’s library will be an appropriate inclusion to Shutterstock’s library. The stock image provider plans to boost its API ecosystem with Giphy’s more than 14,000 photos and API/SDK integrations. It may help to gain 1.7 billion daily users and get over 1.3 billion searches a day.
Giphy is integrated with Microsoft Teams, Slack, and other business platforms and social media. Meta signed a deal to continue leveraging its API.
Since Giphy has partnered with media entities, Shutterstock will use the connection to know its marketing and ad potential by obtaining consumers to utilize relevant GIFs and stickers.
The lost money may not bankrupt Meta. But there is a broader issue about what this sale means for future tech innovation and acquisitions.