LONDON (HPD) — Facebook’s parent company, Meta, announced Tuesday it would sell Giphy after running out of options to head off a ruling by British regulators, who again said the deal to acquire the GIF platform would limit competition and the innovation.
The competition watchdog in Britain had ordered Meta last year to reverse the deal – a year after it was announced – but the company appealed to a court that rejected almost all of its arguments. After reviewing the case in more detail, the Competition and Markets Authority (CMA) concluded that “the only way to avoid the significant impact that the agreement would have on competition” is for Meta to sell Giphy to an approved buyer.
“We are disappointed by the CMA’s decision, but accept today’s ruling as the final word on the matter. We will work closely with the CMA on the Giphy divestment,” Meta said in a statement. “We will continue to assess opportunities – including through acquisition – to bring innovation and choice to more people in the UK and around the world.
Giphy’s short looping videos, or GIFs, are a popular internet tool for social media messaging.
Meta said it will wait for more details on the divestment order and will not appeal further, ending a long battle over a takeover estimated to be worth $400 million.
It is the first time that the British regulatory agency has ordered the nullification of a purchase agreement in the technology sector and marked the prelude to greater scrutiny of the industry: this year, the CMA launched investigations into the dominance of Amazon and the purchase by Microsoft of the video game producer Activision Blizzard.
In its announcement Tuesday, the agency concluded that the deal would encourage traffic to Meta sites, while denying or limiting other platforms’ access to Giphy’s GIFs.