On 30 November 2021 the UK Competition and Markets Authority (CMA) ordered Facebook’s owner, Meta, to divest Giphy, a gif website.
The purchase of Giphy was completed on 15 May 2020. The CMA issued an interim enforcement order on 9 June 2020, preventing the parties from further integrating their businesses pending investigation.
A merger inquiry was launched on 28 January, with the Phase 1 decision to refer to Phase 2 investigation published on 1 April 2021. The CMA’s Phase 2 provisional findings, published on 12 August 2021, cited provisional competition concerns about the merger which it provisionally considered could only be resolved by the divestiture of Giphy from Meta.
The Final Report, published on 30 November 2021, upheld that finding, directing the social media giant to sell Giphy. The CMA highlighted, in particular, concerns about Meta’s ability to enhance its market power by denying or limiting other platforms access to Giphy gifs to drive more traffic to Meta’s social media platforms, or by changing the terms of access to Giphy gifs.
The decision is the first time the CMA has required one of the ‘tech giants’ to unwind a completed transaction and falls within a trend for wider scrutiny on those tech companies, including open CMA investigations into Apple and Google under the Competition Act 1998.
Meta has indicated that it is considering appealing the decision to the Competition Appeal Tribunal.
Please contact Tim Cowen with questions.