Facebook’s parent company, Meta, has been ordered to sell Giphy by the UK’s Competition and Markets Authority.
The company, then known simply as Facebook, bought the Gif-sharing search engine last year for a reported $315m (£236m).
It planned to integrate Giphy’s vast database of looping short video animations with another of its existing social-media platforms, Instagram.
But the CMA ruled the purchase unfair to competing social-media platforms.
Facebook adopted Meta as its new corporate name, in October – but individual platforms owned by the company, Facebook, Instagram and WhatsApp, retain their original identities.
In May 2020, when it announced its acquisition of Giphy, it said 50% of the Gif search engine’s traffic already came from Facebook platforms – half of that from Instagram.
But Giphy also provides Gifs to competitors such as TikTok, Snapchat and Twitter.
Gif stands for Graphics Interchange Format, an image format developed in the 1980s to display static and moving images.
And they have become a staple of social-media posts and comments.
The CMA said: “After consulting with interested businesses and organisations – 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.”
We’ve directed #Facebook to sell Giphy after finding the takeover could reduce competition between social media platforms and increase Facebook’s already significant market power. pic.twitter.com/yRaPxMR43z
— Competition & Markets Authority (@CMAgovUK) November 30, 2021
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Stuart McIntosh, who chaired the independent inquiry into the acquisition, said without action it would “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,” he added.