It is expected that the UK’s Competition and Markets Authority (CMA) will reverse Facebook parent company Meta’s purchase of Giphy in the coming days, according to the Financial Times.
If that happens, it will mark the first time that the country’s competition regulator has unraveled a major tech acquisition.
Meta (Facebook previously) announced in May 2020 that it bought the GIF platform with the goal of rolling it into Instagram. Reports set the price of the deal at $400 million.
As such, Meta has previously argued that because Giphy doesn’t have any operations in the UK, the CMA has no jurisdiction in this case. In addition, it claimed Giphy’s paid services couldn’t be classed as display advertising according to the CMA’s market definition.
“After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat,” Holly Vedova, acting head of the U.S.’ Federal Trade Commission’s (FTC) competition bureau, said in a statement.
The FTC filed a revised complaint against the firm just weeks after a judge threw out its original case in June. The judge had accused federal regulators of failing to provide enough evidence that Facebook created a monopoly in the social networking space.
The CMA opened an investigation into the deal the following month after it raised concerns about the acquisition. The regulator declared in August that the deal could prevent rivals such as TikTok and Snapchat from accessing Giphy’s library of GIFs, as well as removing a potential competitor to Meta in the UK advertising sector.
Meta ended Giphy’s paid ad partnerships, which the CMA said ceased the company’s ad expansion, including to other countries. Also, the watchdog suggested Meta could be forced to sell the service, having until December 1st to publish its final decision.
The UK regulator fined Meta, in October, more than $67.2 million for a “major breach” of an order to remain separate from Giphy during its investigation. The fine was the largest ever handed down by the agency. This step was taken after the regulator accused Meta of “consciously refusing to report” information about the merger.