REG - Competition and Mkts - CMA orders Meta to sell Giphy

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18/10/2022 13:30

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RNS Number : 2717D  Competition and Markets Authority  18 October 2022

CMA orders Meta to sell Giphy

The CMA finds that Meta's purchase of Giphy would limit choice for UK social
media users and reduce innovation in UK display advertising.

The Competition and Markets Authority (CMA) has found that Meta's takeover of
Giphy could allow Meta to limit other social media platforms' access to GIFs,
making those sites less attractive to users and less competitive. It also
found the deal has removed Giphy as a potential challenger in the UK display
advertising market, preventing UK businesses from benefiting from innovation
in this market.

The CMA published its original Phase 2 decision on this case in November 2021,
finding that the deal could harm social media users and UK advertisers, and
ordering Meta to sell Giphy. Meta subsequently appealed that decision to the
Competition Appeal Tribunal (CAT). In July 2022, the CAT upheld the CMA's
decision on 5 of the 6 challenged grounds. In particular, the CAT said it had
"no hesitation" in concluding the CMA's finding - that the merger
substantially reduced dynamic competition - was lawful.

The Tribunal only found in Meta's favour on a procedural ground relating to
the sharing of third-party confidential information. In light of the finding,
the CMA reconsidered its decision. The CMA has conducted an expedited review
and is issuing its final decision today.

Over the past 3 months, an independent CMA panel has analysed additional
third-party evidence, as well as new submissions from Meta and Giphy.
Following its review, the CMA concluded Meta would be able to increase its
already significant market power by:

·    denying or limiting other social media platforms' access to Giphy
GIFs, thereby pushing people to Meta-owned sites, which already make up 73% of
user time spent on social media in the UK, or

·    changing the terms of access - for example, it could require Giphy
customers, such as TikTok, Twitter and Snapchat, to provide more data from UK
users in order to access Giphy GIFs.

The CMA found that GIFs continue to be an important driver of user engagement
on social media platforms, with people making billions of searches globally
each month for Giphy GIFs.

The CMA also found the merger would negatively impact the display advertising
market. Before the merger, Giphy was offering innovative advertising services
in the US and was considering expanding to other countries, including the UK.
These services allowed businesses, such as Dunkin' Donuts and Pepsi, to
promote their brands through visual images and GIFs.

The CMA found that Giphy's advertising services had the potential to compete
with those of Meta, and would have encouraged greater innovation from Meta and
other market players. However, Meta terminated Giphy's advertising services
upon acquisition, removing a potential ad tool for UK businesses. The CMA
considers this particularly concerning given Meta controls almost half of the
£7 billion display advertising market in the UK.

The CMA has concluded the only way to avoid the significant impact the deal
would have on competition is for Giphy to be sold off in its entirety to an
approved buyer.

Stuart McIntosh, Chair of the independent inquiry group carrying out the
remittal investigation, said:

"This deal would significantly reduce competition in two markets. It has
already resulted in the removal of a potential challenger in the UK display ad
market, while also giving Meta the ability to further increase its substantial
market power in social media.

"The only way this can be addressed is by the sale of Giphy. This will promote
innovation in digital advertising, and also ensure UK social media users
continue to benefit from access to Giphy."

 For more information, visit the Meta/Giphy case page
(https://www.gov.uk/cma-cases/facebook-inc-giphy-inc-merger-inquiry) .

Notes to editors

1.   For media queries, please contact the press office on press@cma.gov.uk
or on 020 3738 6460.

2.   Members of the general public can contact the CMA for information about
this update on 020 3738 6000 or general.enquiries@cma.gov.uk.

3.   The CMA found that the merger would lead to a Substantial Lessening of
Competition (SLC) in the following markets: (i) social media services
worldwide (including in the UK) due to foreclosure of rival social media
platforms; and (ii) display advertising in the UK due to a loss of dynamic
competition.

4.   The Competition Appeal Tribunal issued its judgment on Meta's appeal on
14 June 2022. For more information, see the CMA's press release
(https://www.gov.uk/government/news/cat-endorses-cma-assessment-that-meta-s-purchase-of-giphy-harms-competition)
.

 

 

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