In a judgment delivered on Tuesday, June 14, a UK appeals court upheld an earlier ruling ordering Meta to reverse its acquisition of Giphy.
An anti-competitive acquisition according to the authorities
Mark Zuckerberg’s firm announced the acquisition of Giphy in May 2020 for $400 million. Quickly, the Competition and Markets Authority (CMA), the British agency supervising competition and the markets, opened an investigation into this transaction. She eventually ordered Meta to sell Giphy, believing the merger of the two companies was anti-competitive.
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Meta therefore appealed against this decision, but the British justice system has just ruled in favor of the regulator on five of the latter’s six complaints. As explained The Verge, the court ruled that the CMA failed to properly notify Meta of Snapchat’s acquisition of Gfycat for nearly a year after learning of the judgment, compromising the company’s defense. The court will decide how to remedy this error in the coming weeks, in consultation with Meta and the CMA.
” Today’s decision found that the CMA’s approach to its investigation was “difficult to defend” and “undermines the entire decision”. We look forward to understanding how these serious process flaws will be handled. We strongly believe that our investment would improve GIPHY’s product for the millions of people, businesses and partners who use it. said Christopher Sgro, spokesperson for Meta.
The possibilities of the social network in this case are diminishing. If he plans to appeal again, justice seems determined to go in the direction of the CMA.
Meta takeovers disputed
British authorities fear the use of Giphy in the advertising sector. Admittedly, the app’s advertising options are quite limited, but it has facilitated brand promotions through GIFs in the past. Under Meta’s umbrella, its capabilities could become much more important in the broader sphere of digital advertising, which the regulator believes can lead to anti-competitive practices.
Indeed, digital advertising accounts for 66% of total advertising spend in the UK according to Statistics, with Meta and Google taking over the majority of the market. As a reminder, Meta’s takeovers of WhatsApp and Instagram were initially unchallenged; the two platforms are now real behemoths, and the American regulators have decided to finally indict Meta for these acquisitions which took place in 2012 and 2014, assuring that they constitute an abuse of a dominant position.
If the UK justice continues its momentum, then Meta will have to make a decision: either sell Giphy or refuse to integrate it into its products in the UK.