Facebook parent Meta (MVRS) - Get Meta Report has been told by the U.K.’s competition watchdog that it must sell GIF-sharing platform Giphy, which it purchased in 2020 for a reported $400 million.
In its decision announced Tuesday, the U.K. Competition and Markets Authority said the deal could harm social media users as well as U.K. advertisers. Meta said it disagrees with the decision and that it is considering an appeal.
The regulator concluded that Meta's control of the popular search engine for GIFs -- short, looping videos and animations -- would reduce competition between social media platforms, and had already removed one potential rival in the advertising market.
"After consulting with interested businesses and organizations -- and assessing alternative solutions ... 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," the CMA said in a statement.
Facebook initially purchased Giphy with the intention of integrating the service with Instagram, which it owns, making it easier for people to find relevant GIFs for their stories and direct messages.
However, the CMA in its initial findings published earlier this year found that Facebook's control over Giphy could allow it to cut off other social media sites' access to GIFs. Giphy's services currently integrate with platforms such as Twitter (TWTR) - Get Twitter, Inc. Report, Snapchat (SNAP) - Get Snap, Inc. Class A Report, Apple's (AAPL) - Get Apple Inc. Report iMessage and Slack (WORK) - Get Slack Technologies, Inc. Class A Report.
At last check, shares of Meta were down 1.13% at $33 in premarket trading. Facebook in late October announced it was rebranding its name to Meta in a nod to its future focus on developing services and products focused on the metaverse.