Meta (formerly Facebook) will be forced to sell the animated photo site Giphy, the UK Competition and Market Authority (CMA) announced today (Tuesday). This is after an investigation by the authority concluded that the acquisition of the site by the social network is dangerous to competition and gives it a completely monopolistic power over the digital advertising market.
According to the authority’s announcement, the acquisition “will reduce competition between social media platforms” and “has already removed Giphy as a possible competitor in the advertising market.” She added that “the authority has concluded that its concerns about the competition can only be resolved if Facebook sells Giphy as a whole to a happy buyer.”
The acquisition was announced in May 2020 – about a year and a half ago – when Facebook announced that it had purchased the site that allows the creation, editing and sharing of animated images (GIFs, after which it is named), for an undisclosed amount but reportedly stood at about $ 400 million. Meta stated that it intends to integrate the service, which already serves as an animated image repository for all of its applications, into all of its services, but has promised that other applications will also be able to continue using it as a basis for sending their animations. She added that 50% of all activity on Giphy is done from Facebook apps, and half of that is by Instagram users.
However, the real reason for the purchase of the service by Facebook was soon discovered when the company closed its advertising service, which offered companies to pay for the promotion of animated images that constitute advertisements for a product or service. The service was launched shortly before the acquisition, as a US-only pilot, and was planned to expand worldwide – but immediately after the acquisition it closed, in what the UK Competition Authority says proved the purpose of the acquisition was to stop online advertising competition, where Facebook already enjoys almost monopolistic hegemony In the UK alone about $ 7 billion a year.
The authority noted that it is particularly concerned about a situation where Facebook will restrict access to the service for competitors so that users will be encouraged to switch to it from Facebook services at the competitor’s expense, or competitors will be forced to provide information about users in exchange for full access to the service.
Stuart Macintosh, chairman of the Independent Investigation Group, said that “by demanding that Facebook sell Giphy, we protect millions of social networking users and promote competition and innovation in digital advertising.”
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