U.K. Blocks Facebook From Buying Giphy, Says Deal Stifles Competition for Animated Images

The United Kingdom's antitrust watchdog has blocked Facebook from buying Giphy on Tuesday and ordered Facebook to sell off the GIF-sharing platform, the Associated Press reported.

The Competition and Markets Authority said that the deal would have let Facebook "increase its already significant market power" by limiting or denying other platforms' access to Giphy GIFs and driving traffic to only Facebook-owned sites.

Stuart McIntosh, chair of the watchdog's independent group, said the deal "has already removed a potential challenger in the display advertising market."

"Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors' access to Giphy GIFs. By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising," McIntosh said.

The two sides have waged a battle over the deal, reportedly worth $400 million.

Facebook, which has recently been renamed Meta, said it disagreed with the decision and is considering all its options, including an appeal.

"Both consumers and Giphy are better off with the support of our infrastructure, talent, and resources. 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," the company said.

After consulting with other businesses and assessing alternative solutions Facebook had proposed, the regulator group said it "concluded that its competition concerns can only be addressed by Facebook selling Giphy in its entirety to an approved buyer," and that the deal removed potential competition from the United Kingdom's 7 billion pounds, or $9.3 billion display advertising market, of which Facebook already owns half.

For more reporting from the Associated Press, see below.

Facebook Logo
The United Kingdom’s antitrust watchdog has blocked Facebook from buying Giphy and ordered Facebook to sell off the GIF-sharing platform. This March 29, 2018, file photo shows the Facebook logo on screens at the Nasdaq MarketSite in New York City's Times Square. Richard Drew/Associated Press

New York-based Giphy's library of short looping videos, or GIFs, is a popular tool for internet users sending messages or posting on social media.

The Competition and Markets Authority said in a provisional decision in August that Facebook should be forced to sell Giphy. The social giant responded with a strongly worded letter, saying the provisional decision contained "fundamental errors."

Last month, the watchdog fined Facebook 50.5 million pounds ($67.4 million) for failing to provide information needed for the investigation, saying the company's failure to comply was deliberate.

The watchdog has said that prior to the deal, Giphy had been considering expanding its advertising services to other countries, including the U.K. That would have added a new player to the market and encouraged more innovation from social media sites and advertisers, but Facebook terminated Giphy's ad partnerships after announcing the deal, it said.

The acqusition was reportedly blocked
Meta's acquisition of Giphy was reportedly blocked by a U.K. regulator. Getty