Facebook Inc (NASDAQ:FB), owned by Meta, has been told to sell Giphy by the UK’s Competition and Markets Authority (CMA), citing its ownership as potentially harmful to social media users and UK advertisers.
The CMA ruled that through the deal, agreed in May last year, Facebook had removed a potential competitor in the display ad market, an area where it already controls nearly half of activity in the UK.
Giphy had launched its own ad service that allowed organisations to promote their brand through GIFs and potentially rival Facebook in this market.
However, Facebook shut down the service, eliminating a potential competitor.
The UK watchdog also found that ownership of Giphy could be damaging to competition in the social media industry.
Facebook would be able to increase its market power by denying or limiting access of Giphy’s GIFs to other social media platforms, such as Snapchat and TikTok.
Consequently, this would send more users to Facebook owned sites, such as Instagram and WhatsApp.
The CMA also claimed that Facebook could, if it wished, change the terms of access to Giphy for competitors, such as requiring them to provide more user data to access the content.
A Meta spokesperson said the group disagrees with the decision and is considering all options, including appeal.