CMA Fines Meta Second Time over Giphy Deal

“We intend to pay the fine, but it is problematic that the CMA can take decisions that could directly impact the rights of our US employees protected under US law.”

Meta has been hit with a second fine by the Competition and Markets Authority (CMA) in relation to its investigation into the acquisition of Giphy.

Today (4 February), the CMA fined the tech titan £1.5 million after Meta failed to alert the UK watchdog in advance of key staff leaving the company, which is required by the CMA’s initial enforcement order (IEO).

As reported by eWeek UK in August 2021, the CMA provisionally found Meta’s (formerly Facebook) ownership of Giphy could harm social media users and UK advertisers. Meta is challenging this decision.

In October 2021, Meta received a £50 million penalty for breaching its IEO. At the time Meta “significantly limited the scope of compliance reports, despite repeated warnings from the CMA”.

The two entities are really not seeing eye to eye and seem locked in an ego battle. Meta says it will pay this latest fine but doesn’t agree with the decision.

Joel Bamford, Senior Director of Mergers at the CMA, states: “Meta failed to alert us in advance to important changes in their staff, despite knowing they were legally required to do so. This is not the first time this has happened.”

A Meta spokesperson explains: “We intend to pay the fine, but it is problematic that the CMA can take decisions that could directly impact the rights of our US employees protected under US law.”

The tech giant points out that it can’t prevent staff from leaving its company.

The CMA order required Meta to actively inform the competition authority of any ‘material changes’ to the business, including resignations of key staff, and then seek prior consent before rehiring or redistributing responsibilities.

Meta failed on both accounts following the resignation of three key employees and the reallocation of their roles. These three individuals had previously been included on a list of key staff provided to the CMA by Meta, reflecting their importance.

This is not the first time Meta failed to inform the CMA of staff changes at the appropriate time, having failed to do so multiple times in 2021.

While this titanic conflict is raging on and on, it’s worth noting where it all began.

In that August 2021 analysis it was mentioned that the ubiquity of GIFs gives Tenor and Giphy a unique niche in the world of display advertising, one Giphy was using to its fullest extent in the US by striking deals with brands like Dunkin’ Donuts and Universal Studios to promote them on the platform.

When Meta (Facebook at the time) bought Giphy in 2020 for $400 million (£290 million), however, these deals were terminated.

This cancellation and the impact it has had on the digital display advertising market are why the CMA provisionally found the ownership to be potentially damaging to the market.

It has been a bad week for Meta. Its shares sank 26.4%, wiping around more than $200 billion (£147 billion) off its market value, according to Reuters calculations, as Meta blamed Apple’s privacy changes and increased competition from rivals such as TikTok for its disappointing outlook.

Antony Peyton
Antony Peyton
Antony Peyton is the Editor of eWeek UK. He has 18 years' journalism and writing experience. His career has taken him to China, Japan and the UK - covering tech, fintech and business. Follow on Twitter @TonyFintech.

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