(PresidentialInsider.com)- Facebook was dealt a significant blow in the United Kingdom this week, when a regulatory agency said it should sell off one of the companies it has purchased.
On Tuesday, Facebook was advised by the Competition and Markets Authority in the UK that it should sell Giphy. That is a company that Facebook purchased, and that allows users to share GIFs.
The authority, which is a watchdog on anti-trust issues, said the acquisition that was made by Facebook’s parent company Meta and Giphy could cause harm to not only social media users but also advertisers in the UK. They argued this was because the deal could suppress any competition that wanted to offer animated images on Facebook’s social media platform.
The chair of that group that investigated the acquisition, Stuart McIntosh, recently commented for The Associated Press:
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising.”
The AP reported that Facebook already controls 50% of the display advertising market in the UK, which totals roughly 7 billion pounds, or $9.3 billion USD.
CNBC reported that the watchdog group concluded that Facebook could potentially limit the use of images on Giphy by other social media platforms, which could “increase its already significant market power.”
The panel said that sites that are owned by Meta — including Instagram, Facebook and WhatsApp — currently account for 73% of the total time users in the UK spend on social media platforms. The deal with Giphy could increase that percentage considerably.
In addition, the panel concluded that Meta could decide to alter the terms that decide how GIFs are accessed via Giphy. An example they gave was that Twitter, Snapchat and TikTok could be required to provide Meta with more data on their users just so they can access the GIFs provided through Giphy.
For their part, Meta has said that they strongly disagree with the decision that was issued by the watchdog company. In a statement emailed to media outlet The Hill, a spokesperson for Meta said:
“We are reviewing the decision and considering all options, including appeal. Both consumers and GIPHY are better off with the support of our infrastructure, talent, and resources.
“Together, Meta and GIPHY would enhance GIPHY’s product for the millions of people, businesses, developers and API partners in the UK and around the world who use GIPHY every day, providing more choices for everyone.”
This marks the first time that the Competition and Markets Authority has tried to unwind a deal in the tech sector. As of now, there’s not an indication of how long Meta will have to sell off Giphy.
The watchdog group said it consulted with other groups and businesses, and while it considered other solutions that Facebook had proposed, they said they “concluded that its competition concerns can only be addressed by Facebook selling Giphy in its entirety to an approved buyer.”