The acquisition deal is worth $315 million.
Harming Competition in Social Media
The UK anti-trust regulator is expected to stop Meta’s acquisition of Giphy. The deal is said to be worth $315 million. Meta expressed its interest in buying the online GIF platform in May 2020. The deal would allow Giphy to continue to operate separately.
But the UK regulator was concerned with the acquisition. The regulators will have up to December 1 to make a final decision.
Meta disagreed with the preliminary findings by the CMA. It didn’t believe that the decision provided enough evidence. The company stated that the deal is in the best interest of people in the UK, who are using GIPHY and Meta’s services. It promised to continue to work with the UK regulator to address the misconception about how the deal can harm competition.
The UK regulator finds the deal to be harmful to the competition in digital marketing markets. If the regulator will reverse Meta’s Giphy deal, then it would be the first time that the regulators reverse a completed tech deal.
The social media company controls up to 50% of the UK display ad market. Giphy offered paid ads in the US. The CMA argued that the GIF platform could expand its service into the UK without the merger.
Meta has fought the regulator’s assessment. Blocking the merger will be controversial and may trigger an appeal. The social media company even accused the regulator to be “engaging in extraterritorial over-reach.”
The company also said that the CMA’s findings are full of errors and facts. It also stated that, without the merger, Giphy would continue to operate in a diminished or underfunded state.
Last month, the CMA fined Meta $69.6 million because it breached an order that the social media company will remain separate from Giphy while the regulator is still investigating the merger. The regulator accused Meta of refusing to report details about its business and Giphy.
Regulators worldwide have growing concerns about allowing killer acquisitions to get away from their hands after they allowed Meta to acquire Instagram and WhatsApp.
US Companies
Both Meta and Giphy are US companies. However, the CMA can still investigate because Giphy makes more than £70 million in the UK. It can also probe the deal because the combined businesses have a UK market share of 25%.
Meta said that by acquiring Giphy, the platform will improve the offers of Instagram by allowing people more tools and features to use. When the deal is complete, developers and API partners can still access Giphy. The creative community can continue creating great content.
The company will continue to show UK regulators that the deal will be beneficial for developers and content creators.
When Facebook expressed its intention to buy Giphy, people speculated that acquiring it would allow Facebook a new way to examine how its rivals are using Giphy. However, the company disagreed with it. Rather, it maintained its stance that buying Giphy is a wise decision as the service needs a home and data wasn’t the motivation of the acquisition.
