- The UK's antitrust regulator has ordered Meta to sell Giphy.
- Meta bought Giphy for $400 million in May 2020.
- Meta said it disagrees with the ruling and is considering options including appeal.
The UK's antitrust regulator issued a ruling Tuesday saying Meta, formerly Facebook, must sell Giphy, the gif-database company it bought for $400 million in May 2020.
"The Competition and Markets Authority (CMA) has today concluded that Facebook's acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market," the CMA said in a statement issued to Insider.
The CMA said the merger could give Meta the power to limit or block other social media platforms from accessing Giphy.
It added that Meta could potentially require rival social media platforms including TikTok, Twitter, and Snapchat, to provide user data in exchange for access to Giphy.
The CMA also said that by buying Giphy, Meta had effectively removed a competitor in the display advertising market.
"Facebook 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 Facebook controls nearly half of the £7 billion [$9.4 billion] display advertising market in the UK," the CMA said in its statement.
Meta said it did not agree with the regulator's decision in a statement sent to Insider following the announcement.
"We are reviewing the decision and considering all options, including appeal. Both consumers and GIPHY are better off with the support of our infrastructure, talent, and resources," a Meta spokesperson told Insider.
"Together, Meta and GIPHY would enhance GIPHY's product for the millions of people, businesses, developers and API partners in the UK and around the world who use GIPHY every day, providing more choices for everyone," they added.
The CMA's ruling aligned with a provisional finding it issued in August. The regulator opened its inquiry in June 2020, one month after the merger was announced.
Speaking to Insider the day before the ruling was issued Prof. Greg Taylor, an associate professor of economics at the Oxford Internet Institute, said a ruling to reverse the Giphy acquisition could mark a "line in the sand" for Big Tech regulation.
"Outside of the tech world, mergers get investigated all the time and it's not that unusual for them to be blocked or to have some sort of remedy imposed upon them. Within specifically the tech sphere, there's been almost no major intervention to prevent the merger by one of the major tech firms, despite the fact that, collectively, they've acquired hundreds of firms in the last couple of decades," Taylor said.
Meta has come under heightened antitrust scrutiny from lawmakers over the last few years — with a particular focus on its acquisitions. In July 2020 chair of the US House antitrust subcommittee Rep. David Cicilline said the company should be broken up.