REG - Competition and Mkts - CMA directs Facebook to sell Giphy

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30/11/2021 11:00

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RNS Number : 0248U  Competition and Markets Authority  30 November 2021

CMA directs Facebook to sell Giphy

The CMA requires Facebook (which has recently renamed itself 'Meta') to sell
Giphy, after finding that the deal could harm social media users and UK
advertisers.

In line with its Phase 2 provisional findings i
(https://www.gov.uk/government/news/facebook-s-takeover-of-giphy-raises-competition-concerns)
ssued in August, the Competition and Markets Authority (CMA) has today
concluded that Facebook's acquisition of Giphy would reduce competition
between social media platforms and that the deal has already removed Giphy as
a potential challenger in the display advertising market.

The independent CMA panel reviewing the merger has concluded that Facebook
would be able to increase its already significant market power in relation to
other social media platforms by:

·    denying or limiting other platforms' access to Giphy GIFs, driving
more traffic to Facebook-owned sites - Facebook, WhatsApp and Instagram -
which already account for 73% of user time spent on social media in the UK, or

·    changing the terms of access by, for example, requiring TikTok,
Twitter and Snapchat to provide more user data in order to access Giphy GIFs.

As part of its in-depth investigation, the CMA also looked at how the deal
would affect the display advertising market. It found that, before the merger,
Giphy had launched innovative advertising services which it was considering
expanding to countries outside the US, including the UK. Giphy's services
allowed companies - such as Dunkin' Donuts and Pepsi - to promote their brands
through visual images and GIFs.

The CMA found that 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 CMA
considers this particularly concerning given that Facebook controls nearly
half of the £7 billion display advertising market in the UK.

After consulting with interested businesses and organisations - and assessing
alternative solutions (known as 'remedies') put forward by Facebook - the CMA
has concluded that its competition concerns can only be addressed by Facebook
selling Giphy in its entirety to an approved buyer.

Stuart McIntosh, Chair of the independent inquiry group carrying out the phase
2 investigation, said:

"The tie-up between Facebook and Giphy has already removed a potential
challenger in the display advertising market.

"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.

"By requiring Facebook to sell Giphy, we are protecting millions of social
media users and promoting competition and innovation in digital advertising."

 

Notes to Editor

1.   Facebook, Inc. has recently renamed itself Meta Platforms Inc. For the
purposes of this press release, we refer to the company as 'Facebook'.

2.   The CMA recently fined Facebook £50.5 million for breaching an initial
enforcement order
(https://www.gov.uk/government/news/cma-fines-facebook-over-enforcement-order-breach)
imposed in relation to the Facebook/Giphy merger.

3.   For more information, visit the Facebook/Giphy case page
(https://www.gov.uk/cma-cases/facebook-inc-giphy-inc-merger-inquiry) .

 

 

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