UK Antitrust Authorities Order Meta to Divest 'Avoidance' Assets

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The UK regulatory authority has ordered Meta (formerly Facebook), the world's largest social media (SNS) company, to divest the moving image search platform Giphy.

According to the Wall Street Journal (WSJ) on the 30th (local time), the UK's antitrust authority, the Competition and Markets Authority (CMA), has demanded that Meta sell Giphy. This is due to concerns that Meta's acquisition of Giphy could harm SNS users and advertisers.

Previously, Meta acquired Giphy in May last year for $315 million (approximately 373 billion KRW). Giphy is a moving image search platform co-founded in 2013 by Korean-American Alex Chung and Jace Cook.

Giphy provides short videos capturing various emotions such as celebrities, ordinary people, animals, and animated characters showing surprise, anger, joy, cheering, high-fiving, sadness, or frustration.

After acquiring Giphy, Meta announced plans to integrate it with its photo and video sharing SNS, Instagram.

However, the CMA stated that this acquisition could remove a potential challenger in the advertising market, thereby restricting competition between social media platforms and advertisers, and ordered Meta to sell Giphy again.

The CMA expressed concerns that most of Meta's major competitors, such as Twitter, TikTok, and Snapchat, use GIF images searched through Giphy, and if Meta denies their access or changes usage conditions by demanding more user data, Facebook's already dominant market power could be further strengthened.

It also pointed out that before being acquired by Meta, Giphy had started an innovative paid advertising business in the US, which had the potential to compete with Facebook's advertising services.

The CMA explained that after consulting with interested companies and institutions and reviewing alternative solutions, it concluded that the only way to alleviate concerns about competition restrictions is to divest Giphy entirely.

Meta immediately opposed the CMA's decision and announced its intention to appeal.

Meta stated, "We do not agree with this decision" and "We are considering all options, including an appeal."

It also argued that "consumers and Giphy will benefit from the infrastructure and assets that Meta can provide."

The WSJ evaluated that "While it is not unprecedented for UK regulators to intervene in mergers and acquisitions between American companies, this is an unusual measure."

This content was produced with the assistance of AI translation services.