(Bloomberg) — The U.K.’s antitrust watchdog said that Facebook parent Meta Platforms Inc. must sell Giphy to address competition concerns, the first time the regulator has forced a Big Tech firm to unwind an already completed deal.
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The Competition and Markets Authority concluded its in-depth probe into the tie up and found the deal with the GIF search engine would reduce competition between social media platforms, it said in a statement Tuesday. It had initially come to this conclusion in provisional findings published in August.
The $315 million deal for Giphy, completed last year, raised concerns from U.K. regulators from the beginning. The antitrust probe was initially delayed after officials ordered Facebook to pause plans to integrate the company, sparking a lengthy court battle.
Meta now has two choices: to appeal or divest. The company will be able to appeal the decision to the U.K.’s Competition and Appeals Tribunal where it would be heard as a judicial review, not on whether the decision was right or wrong. If Meta accepts the CMA’s decision it will have to find a suitable buyer that will be vetted by the regulator.
“We disagree with this decision,” a Meta spokesperson said. “We are reviewing the decision and considering all options, including appeal.”
High-Risk
Closing a deal without approval can be a high-risk strategy. The EU may fine Illumina Inc. as much as $400 million for completing a deal without permission. Google closed its Fitbit takeover earlier this year without getting U.S. or Australian permission. Australia is conducting an enforcement probe into that deal.
The watchdog said the deal had already removed the platform as a potential challenger in the display advertising market and that Meta must sell Giphy in its entirety to an approved buyer.
“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,” Stuart McIntosh, chair of the investigation, said.
Both sides have battled the merger review process. The CMA fined Meta 50.5 million pounds ($68 million) for failing to update regulators on efforts to hold Giphy separate before getting U.K. merger approval, which Meta later did not appeal. While Meta has accused the CMA of being disproportionate and failing to offer it alternatives to divestiture.
Merger watchdogs across Europe are giving U.S. tech giants a much tougher time as they investigate their market power. Regulators faced a barrage of criticism for allowing Silicon Valley to snap up potential rivals before they make it big. Facebook’s game-changing takeover of Instagram is often cited as a deal that was waved through by regulators without proper scrutiny.
Other global regulators have not shown as much concern with the deal. Margrethe Vestager’s European Commission didn’t review the case, while Austria’s competition agency is still reviewing it.
(Updates with other big tech deals in sixth paragraph)
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