• by Wendy Davis  @wendyndavis, December 23, 2021

Facebook is fighting a UK regulator's order to sell Giphy, an animated images platform acquired by Facebook last year for a reported $400 million.

Late last month, the UK Competition and Markets Authority said that Facebook's merger with Giphy “would reduce competition between social media platforms,” and had already “removed Giphy as a potential challenger in the display advertising market.”

The regulator ordered Facebook, now named Meta, to unwind the deal and sell the animated images company to a “suitable buyer.”

A company spokesperson says Facebook will appeal, and plans to seek a stay of the order to divest.

"The decision to block the deal is wrong on the law and the facts, and the evidence does not support the [Competition and Markets Authority's] conclusions or remedy," the spokesperson stated. 

The Competition and Markets Authority said that before the merger, Giphy “had launched innovative advertising services which it was considering expanding to countries outside the US, including the UK.”

Those services “allowed companies -- such as Dunkin’ Donuts and Pepsi -- to promote their brands through visual images and GIFs,” the regulator continued.

The agency added in a 378-page report that Giphy would likely have “continued to innovate” and generate revenue, had the merger not occurred.

“The parties told us that it was likely that Giphy would have become a significantly weakened business had it not been bought by Facebook,” the report reads. “Our view is that, had the merger not gone ahead, Giphy would have continued to supply GIFs [Graphics Interchange Format images] to social media platforms (including Facebook), as it had done before the merger, and would have continued to innovate, develop its products and services, generate revenue and explore (with the financial and commercial support of investors) various options to further monetise its products.”