Meta's acquisition of Giphy is set to be blocked by an antitrust regulator, report says

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Meta's acquisition of Giphy is set to be blocked by an antitrust regulator, report says
Meta CEO Mark Zuckerberg.Alex Wong/Getty Images
  • The UK's antitrust regulator is set to block Meta's acquisition of Giphy, sources told the Financial Times.
  • Meta — formerly Facebook — announced in May 2020 that it was acquiring Giphy.
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Meta — the company formerly known as Facebook — is set to have a major acquisition blocked by the UK's antitrust regulator, per a report from the Financial Times.

Sources familiar with the matter told the FT that the UK Competition and Markets Authority is expected to reverse Meta's acquisition of Giphy in the coming days.

The FT did not specify when the announcement would be made, but the CMA has a deadline of December 1 to issue its decision.

Facebook announced in May 2020 it was acquiring Giphy for $400 million. Antitrust regulators in the UK and Australia announced a month later that they were scrutinizing the deal.

The CMA's initial enforcement order stopped Facebook from integrating with Giphy while it conducted the probe.

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The CMA issued a provisional finding in August 2021 saying the merger would harm competition, and that the only effective remedy would be for Meta to sell Giphy.

In that finding, the CMA said control over Giphy could give Facebook an unfair advantage over rival social media platforms such as Snapchat and TikTok which also use Giphy. It also argued that the merger would remove Giphy as a potential competitor to Meta in the display advertising industry.

Although Meta and Giphy are both US companies, the CMA has jurisdiction over any acquisition where the combined parties control over 25% of a particular good or service supplied in the UK. The CMA said that, together, Meta and Giphy would control an 8o-90% market share of searchable animated sticker libraries.

The CMA fined Facebook $70 million in October this year as part of its probe, saying the company had not provided enough information about how it continued to compete with Giphy. Facebook objected to the fine, saying it was doing its best to comply with the CMA's requirements.

Meta did not immediately respond when contacted by Insider for comment on the FT's report. The CMA declined to comment when contacted by Insider.

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Prof. Greg Taylor, an associate professor of economics at the Oxford Internet Institute, said it's within the CMA's powers to block the acquisition entirely. He added the CMA could also choose to block certain parts of the deal.

If the CMA enforces against Meta's acquisition, Taylor said it will mark a turning point for Big Tech companies.

"Outside of the tech world, mergers get investigated all the time and it's not that unusual for them to be blocked to have some sort of remedy imposed upon them. Within specifically the tech sphere, there's been almost no major intervention to prevent the merger by one of the major tech firms, despite the fact that, collectively, they've acquired hundreds of firms in the last couple of decades," Taylor told Insider.

"The first time that we see such a merger blocked, it's really, I think, drawing a line in the sand," he added.

Meta has come under increased antitrust scrutiny from lawmakers along with other Big Tech companies over the past few years, and in July 2020 Rep. David Cicilline chair of the US House antitrust subcommittee said the company should be broken up over "classic monopoly behavior."

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Earlier this month, founders of a photo app called Phhhoto filed a lawsuit claiming Facebook cloned and crushed their app after initially offering a partnership.

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