Facebook parent Meta agrees to sell Giphy, ending battle with UK regulators

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LONDON (AP) — Facebook parent Meta said Tuesday it will sell Giphy after running out of options to thwart a decision by British regulators, who again found that a deal to buy the GIF-sharing platform would limit competition and innovation.

The British competition watchdog had ordered Meta last year to cancel the deal — a year after it was published — but the company appealed to the court, which rejected most of its arguments. After further consideration of the case, the Competition and Markets Authority concluded that “the only way to avoid the significant impact the deal would have on competition” is for Meta to sell Giphy to an approved buyer.

“We are disappointed by the CMA’s decision, but accept today’s decision as the final word on the matter. We will be working closely with the CMA to divest GIPHY,” Meta said in a statement. “We will continue to assess opportunities – including acquisition – to bring innovation and choice to more people in the UK and around the world. “

New York-based Giphy’s library of short videos or GIFs is a popular tool for internet users to send messages or post on social media.

Meta said it would wait for more details on the sale order and would not file another appeal, ending a protracted battle over the reportedly $400 million acquisition.

It was the first time the UK watchdog had tried to overturn a tech deal and marked the start of increased scrutiny: earlier this year the CMA opened an investigation into Amazon’s dominance and Microsoft bought video game maker Activision Blizzard.

The watchdog’s initial detailed investigation found that Facebook’s purchase of Giphy would hurt social media users and advertisers by stifling competition for animated images.

After reviewing its decision, the watchdog concluded on Tuesday that the agreement would increase traffic on Met-owned websites, while denying or limiting access to online platforms to Giphy GIFs. It also found the deal would remove potential competition from Britain’s £7 billion ($7.9 billion) display advertising market, half of which is controlled by Facebook.