The UK Competition Authority (CMA) told Meta, Facebook’s parent company, that it should sell GIF sharing platform Giphy.
The Competition and Markets Authority said on Tuesday that the deal could harm social media users and UK advertisers. Meta said it disagreed with the decision and was considering an appeal.
According to the CMA, Meta may also change the terms of access to Giphy GIFs. For example, companies like TikTok, Twitter, and Snapchat may be required to provide more user data to access Giphy GIFs.
Prior to the deal last May, Giphy launched its own ad services and was considering expanding outside the US, including the UK. Giphy’s ad services have allowed companies like Dunkin to promote their brands through visuals and GIFs.
The CMA believes that Giphy’s advertising services could compete with Facebook’s own display advertising services, and has encouraged innovation from other social media platforms and advertisers.
Facebook shut down Giphy’s ad services during the merger. The CMA said this is worrying, especially as Facebook controls nearly half of the £ 7 billion UK display advertising market.
Stuart McIntosh, chairman of an independent research group investigating, said on Tuesday that the deal has already eliminated a potential rival in the display advertising market.
“By pushing Facebook to sell Giphy, we are protecting millions of social media users and fostering competition and innovation in digital advertising.”
It is unclear how quickly Meta will be able to sell Giphy.
Peter Broadhurst, partner at law firm Crowell & Moring, called the CMA’s decision extremely important.
“This is the first time the CMA has ever blocked a major digital transaction and indicates the direction for UK regulatory oversight of similar transactions in the future,” he said in a statement.
He added: “The ruling also assumes that the CMA will not back down in the face of questions and criticism over jurisdiction and over-coverage …”
In October, the CMA fined the then Facebook Inc. £ 50.5 million for failure to provide regular updates to confirm completion of the order. It says Facebook has “significantly limited the scope of these updates,” despite repeated warnings.