The UK’s competition regulator has asked Meta, formerly known as Facebook, to sell online imaging platform Giphy, the first time the watchdog has demanded the cancellation of a completed Big Tech deal.
The management agency has expected to reverse the deal in a move seen as an escalation of their attack on Big Tech, the Financial Times reported on Monday. The Giphy will now be sold to “approved buyers,” the CMA said.
The Competition and Markets Authority said in a statement on Tuesday, the $315 million deal would put the US tech giant in a position to “increase its already substantial market power relative to other platforms.” other social media”.
The CMA has since last June been investigating the merger, bringing together the UK’s largest gif supplier with the largest company in social media and digital display advertising. The watchdog said its competition concerns could only be resolved by selling Giphy as a whole, despite the solutions offered by Meta.
Meta said it was “reviewing the decision and considering all options, including appeals”.
Stuart McIntosh, chair of the CMA investigative panel, said: “By asking Facebook to sell Giphy, we are protecting the social network’s millions of users and fostering competition and innovation in digital advertising. ”
The watchdog said Meta may have blocked competitors’ access to the gif, which stands for graphics exchange format and refers to short repeat operations and drives more traffic to its own website, the watchdog said on Tuesday. Meta accounts for 73% of the time users spend on social media in the UK. The CMA argued that Meta could also request more data from competitors like TikTok in exchange for gifs.
The CMA said the deal would reduce competition in the £7billion display advertising market, although Giphy has no presence or plans in that area. The regulator says almost half of the market is controlled by Facebook.
In the past, Giphy has allowed companies in the US to promote their brands through gifs, and CMA has said it may have expanded to the UK – something the company has denied.
Lawyers say the ruling is evidence of the regulator’s more aggressive stance and could affect incorporated companies that are not currently competing in the UK market.
Peter Broadhurst, a competition partner at law firm Crowell & Moring, said there could be “future challenges for companies trying to enter into transactions where the parties are not actually competing but can be done in the future”.
The CMA’s move comes as part of a global effort to prevent major tech platforms from acquiring rivals before they become too big and a threat to their businesses, across brands. the so-called killer acquisition.
According to data from law firm Linklaters, less than 70 per cent of deals conducting “phase two” investigations in the UK now end up in mortality, as they are abandoned, blocked or untethered. from 30% in the period 2014-2017. .
EU regulators are scrapping old tools to see if they can claim legal jurisdiction over transactions that target no revenue within the union but are concerned the merger could can undermine competition and hurt innovation.
Below proposed rules of technology In Brussels, acquisitions that were previously harder to detect or block will come under increased scrutiny after concerns that Facebook and WhatsApp should not be wiped out.
