The United Kingdom's Competition and Markets Authority orders Meta to sell the gif database GIPHY following antitrust consultations. The UK watchdog concludes in a recently released document that Meta's acquisition of GIPHY would reduce advancement in UK display advertising and restrict choice for UK social media users.
CMA Orders GIPHY Offload
Meta (formerly Facebook) paid $400 million for the gif company in 2020 and has since added GIPHY's library to Instagram. In a news release, the company confirmed that 50% of GIPHY's traffic at the time comes from the Facebook family of apps, with Instagram accounting for half of that.
At the time of the merger, Facebook shut down GIPHY's advertising services. This led to the assumption that Meta would disrupt the online advertising market and could trigger antitrust proceedings.
According to a previous report, both Meta and GIPHY have filed appeals to overturn the CMA's remittal over the course of a few years. Meta announced in 2020 that it would consider all available options for overturning the decision of the inquiry panel.
The CMA has been particularly resolute about pointing out how the aforementioned acquisition would restrict the accessibility of gifs to other social media companies, deviating users from competing platforms.
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According to a news release, the CMA body also discovered that the deal prevented UK businesses from gaining from innovation in this market by eliminating GIPHY as a potential rival in the UK display advertising market. This is despite the fact that the company admitted this was not its intention when purchasing the database.
CNET says that Meta has already acquired a wide range of tech firms to expand the Facebook extended universe and it rarely sells any of its assets. The report adds that Meta announced its decision to sell GIPHY and stated that it would not appeal the CMA's ruling shortly after the latter's publication.
Looking Back at the GIPHY Appeal
When given the opportunity to appeal, GIPHY was adamant that the buyout would not result in a significant reduction in competition in the United Kingdom. The Internet expression database even stated that no one other than Meta will be interested in purchasing the company.
GIPHY also mentioned in its September appeal document that gifs have lost popularity as a content form with younger users, in particular, describing GIFs as "for boomers" and "cringe."
The Guardian reports that GIPHY's valuation has dropped significantly by $200 million since its 2016 peak and that its primary service appears to be becoming obsolete. According to the American gif company's disclosures to CMA, gif usage has generally declined over the past ten years. GIPHY also noted a lack of enthusiasm and declining interest among its users and content partners.
GIPHY's filing also claims that fewer content producers value GIFs and, between October 2020 and May 2022, fewer GIFs were generally uploaded to GIPHY. Additionally, GIPHY noticed a decline in the number of accounts created by content partners between October 2022 and May 2022.
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