The U.K.’s Competition and Markets Authority (CMA) recently ruled against Meta’s acquisition of Giphy, and Meta must now sell all the GIFs just 19 months after acquiring the company for $400 million. It is a definitive move and a true global first.
The CMA’s decision caused controversy because Facebook’s Instagram acquisition was approved by its predecessor, the Office of Fair Trading, back in 2012 in what was then the most high-profile investigation of the deal outside the United States.
Compared to Meta/Facebook’s other high-profile acquisitions, Giphy is considered small. WhatsApp was bought for $19 billion in 2014, Oculus VR for $2 billion in 2014, and Instagram for just $715 million in 2012. However, regulators now believe that smaller acquisitions also harm competition. “I think of serial acquisitions as a Pac-Man strategy. The collective impact of hundreds of smaller acquisitions can lead to a monopolistic behemoth,” said Rebecca Slaughter, US Federal Trade Commissioner.
Meta said in a blog post that it had acquired Giphy to help Instagram users “express themselves.” The CMA argued that the deal could have another side effect: give Meta power over its competitors, either denying them GIFs or demanding data in return.
The CMA has been conducting a full investigation into the Giphy acquisition since April this year. Last September, Facebook challenged the outcome of the preliminary investigation by targeting the UK’s jurisdiction over the deal in a document published by the UK Government. “The facts, in the present case, are simple. Facebook and Giphy do not compete in the UK, and there is no overlap in relevant commercial activity giving rise to a competition concern,” argued Facebook.
Meta now has a growing trend of questioning mergers between countries with which the deal has no significant connection. The European Union is also beginning to investigate deals sealed far beyond its borders.