UK May Push Facebook (FB) to Sell Giphy Over Competition Concerns

Facebook (NASDAQ: FB) may be forced to divest the GIF website Giphy, according to the latest news from the UK.

The UK's Competition and Markets Authority (CMA) said today that the deal between two companies “will harm competition between social media platforms and remove a potential challenger in the display advertising market.”

If these concerns are ultimately confirmed, Facebook would be asked to unwind the deal and sell off Giphy in its entirety.

“The CMA provisionally found that Facebook’s ownership of Giphy could lead it to deny other platforms access to its GIFs. Alternatively, it could change the terms of this access – for example, Facebook could require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more user data in order to access Giphy GIFs. Such actions could increase Facebook’s market power, WhatsApp, and Instagram – account for over 70% of the time people spend on social media and are accessed at least once a month by 80% of all internet users,” the regulator said in today’s statement.

According to the CMA’s calculations, Facebook already has a share of around 50% of the £5.5 billion display advertising market in the UK, which is “already significant.”

“While our investigation has shown serious competition concerns, these are provisional. We will now consult on our findings before completing our review. Should we conclude that the merger is detrimental to the market and social media users, we will take the necessary actions to make sure people are protected,” commented Stuart McIntosh, chair of the independent inquiry group.

Facebook, on the other side, rejected findings.

"We disagree with the CMA's preliminary findings, which we do not believe to be supported by the evidence. As we have demonstrated, this merger is in the best interest of people and businesses in the UK - and around the world," a Facebook spokesperson said.

The CMA is due to issue a final report by 6 October 2021.

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