Facebook's parent company, Meta, has been directed to sell animated images platform, GIPHY by UK competition watchdog. The Competition and Markets Authority (CMA) found that Facebook's acquisition of GIPHY last year would reduce competition between social media platforms and that the deal has already removed GIPHY as a potential challenger in the display advertising market. In addition, CMA said its competition concerns can only be addressed by Meta selling GIPHY in its entirety to an approved buyer.
The independent CMA panel reviewing the merger concluded that the deal had increased Meta's "already significant market power" to other social media platforms by denying or limiting other platforms’ access to GIPHY GIFs. This in turn, drove more traffic to Meta-owned sites such as WhatsApp and Instagram, which already account for 73% of user time spent on social media in the UK, said CMA in a statement. Furthermore, if other social media platforms in the market wanted to access GIPHY Gifs, it was required of them to provide more user data to Meta. These social media platforms include TikTok, Twitter and Snapchat. CMA explained:
GIPHY’s advertising services had the potential to compete with Facebook’s own display advertising services. They would have also encouraged greater innovation from others in the market, including social media sites and advertisers.
Facebook terminated GIPHY’s advertising services at the time of the merger, removing an important source of potential competition," the UK competition watchdog added. Meanwhile, Stuart McIntosh, chair of the independent investigation on Facebook-GIPHY for the CMA, also reiterated that the Facebook-GIPHY tie-up "has already removed a potential challenger in the display advertising market".
In fact, the CMA also looked at how the deal would affect the display advertising market and found out that before the merger, GIPHY had launched innovative advertising services which it was considering expanding to countries outside the US, including the UK. These services allowed companies such as Dunkin’ Donuts and Pepsi to promote their brands through visual images and GIFs. According to Reuters, Meta said it could appeal against the competition watchdog's decision, and it has four weeks to do so. MARKETING-INTERACTIVE has reached out to Meta for a statement.
Meta first acquired GIPHY in May 2020 for US$400 million in a move to further its GIF library into Instagram. GIPHY first established itself as a search engine for GIFs in 2013. Instagram said back then that 50% of GIPHY’s traffic comes from the Facebook family of apps, half of that from Instagram alone. By bringing Instagram and GIPHY together, Facebook aimed to make it easier for users to find the GIFs and stickers in "Stories" and "Direct".
“GIFs and stickers give people meaningful and creative ways to express themselves. We see the positivity in how people use GIPHY in our products today, and we know that bringing the GIPHY team’s creativity and talent together with ours will only accelerate how people use visual communication to connect with each other,” Instagram explained previously.
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