Image source: TIME
Meta, the parent company of Facebook, is expected to sell Giphy because the UK plans to force the tech giant to conclude its service acquisition.
Giphy is an American online database that users utilize to find GIFs for social media comments, posts, chats, and text messages.
The announcement marks the first time regulators have dismembered part of the tech giant since the company’s dominance looked into global antitrust scrutiny.
The decision came to a close on Tuesday.
The UK Competition and Market Authority (CMA) decision sparked a long battle with Meta over the impact of the deal on rivals’ access to GIFs and the digital advertising market.
Meta went to court to defend the deal, but British officials got the upper hand over the summer.
The tribunal upheld the CMA’s conclusion that the acquisition of Giphy could reduce competition by eliminating a competitor in online advertising.
The acquisition also restricts third-party access to Giphy’s GIF library.
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The parent company of Facebook released a statement on Tuesday confirming that it would accept the UK’s decision as “the final word on the matter.”
A Meta spokesperson elaborated on the statement saying:
“We will work closely with the CMA on divesting GIPHY.”
“We are grateful to the GIPHY team during this uncertain time for their business, and wish them every success.”
Although this resulted in a loss, Meta said it would continue to explore acquisitions.
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Over the years, critics have accused big tech companies of seeking “killer acquisitions” from smaller companies.
Critics say the acquisitions could undermine the dominance of the biggest names, cutting potential competition.
In the United States, the “buy-or-bury” strategy is at the center of a federal lawsuit that forces Meta to split WhatsApp and Instagram.
The Federal Trade Commission’s violation attempt could lead to a trial in 2024.
Additionally, the FTC filed a lawsuit to block the social media giant’s acquisition of Within Unlimited, a virtual reality technology company.
They argued that the deal could give Meta more power to build a “virtual reality empire.”
Meta now faces both lawsuits.
Meta says it will sell Giphy to comply with UK breakup order