UK Watchdog Tells Meta to Sell Giphy

“By requiring [Meta] to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”

It’s a setback for a tech titan as the Competition and Markets Authority (CMA) has told Meta to sell Giphy as the $400 million (£300 million) deal could harm social media users and UK advertisers.

In line with its Phase 2 provisional findings issued in August, and following a £50 million fine last month for Meta (formerly known as Facebook) for refusing to follow procedures, the CMA has today (30 November) reached its decision.

Stuart McIntosh, Chair of the independent inquiry group carrying out the phase 2 investigation, explains: “By requiring [Meta] to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”

The independent CMA panel says Meta would have been able to increase its “already significant market power in relation to other social media platforms”.

The watchdog mentioned a few issues in its announcement.

For instance, the deal would deny or limit other platforms’ access to Giphy GIFs, driving more traffic to Meta-owned sites – Facebook, WhatsApp and Instagram – which already account for 73% of user time spent on social media in the UK.

In addition, the deal could change terms of access by, for example, requiring TikTok, Twitter and Snapchat to provide more user data in order to access Giphy GIFs.

The CMA also looked at how the deal would affect the display advertising market. It found that, before the merger, Giphy had launched advertising services which it was considering expanding to countries outside the US, including the UK.

The CMA found that Giphy’s advertising services had the potential to compete with Meta’s own display advertising services. They would have also “encouraged greater innovation” from others in the market, including social media sites and advertisers. Meta terminated Giphy’s advertising services at the time of the merger, removing an “important source of potential competition”.

The CMA considers this “particularly concerning” given that Meta controls nearly half of the £7 billion display advertising market in the UK.

There’s no official response from Meta at the time of writing.

In August, eWeek UK examined the implications of the deal and an advertising monopoly for Facebook (as it was then known).

By possessing Giphy alongside Instagram, Whatsapp and the Facebook app/website, the tech giant would own the No. 1 and No. 4 biggest social media platforms in the UK (as of June 2021) according to Statista, the No. 1 and No. 2 most popular messaging apps in the UK (as of October 2020), and a database used by most of the other prominent social media platforms including Twitter, TikTok and Snapchat.

Just as an example of what this reach means, look at Facebook’s group of services and its 2.76 billion daily users worldwide. That number of people using Facebook, Instagram or Whatsapp daily is a staggering number by itself, but it also handles the personal details of these 2.76 billion daily users, from private emails to phone numbers to even financial information through its Facebook Pay feature.

With this information, it does about what you might expect: provides targeted advertising for various companies; tracks user movement on unrelated websites; and of course fails to secure it, making millions of users’ private data public.

With Giphy, it could have potentially tracked more data with its 700 million daily users, further refined advertising algorithms and shut competitors out of a major image-hosting service.

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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