- Facebook parent Meta Platforms has been ordered to sell Giphy.
- UK Competition and Markets Authority (CMA) confirmed the ruling first published in November 2021.
- The antitrust watchdog claimed Giphy has the ability to become a direct rival of Facebook in the country.
Meta Platforms has been ordered to sell the UK-based GIF platform Giphy. The announcement came out on Tuesday after the UK Competition and Markets Authority (CMA) upheld its decision, first published in November 2021.
The social media conglomerate acquired the GIF creation website in May 2020, as part of a multi-faceted strategy to expand user interactions across its platforms. A GIF (graphic integration format) is a file format that combines different photos/images to form one animated image file.
GIFs have gained popularity over the last decade becoming crucial engagement drivers on social media platforms.
Meta had big plans for the Giphy, including some use-case in the metaverse. The company perceived Giphy as an integral facet of its digital advertising strategy. The company also teamed up with 3D tech startup Vntana in March 2022 to trial 3D ads that could be adopted for metaverse advertising.
The social media company’s bottom line has suffered significantly since launching its metaverse campaign, after investing more than $15 billion to date.
Meta has built its empire around digital advertising, growing to become one of the big five technology companies in the world. However, without a tried and tested advertising model for the metaverse, the company has seen its market value plummet, pushing co-founder and CEO Mark Zuckerberg’s net worth down $71 billion.
Tuesday’s announcement is not the first bottleneck the company has faced this year. In July, the US Federal Trade Commission sued Meta to block its acquisition of virtual reality company Within amid fears it will make the Facebook parent too powerful in a burgeoning industry.
Explaining the CMA’s decision to confirm the ruling, Stuart McIntosh, the chair of the independent inquiry group that carried 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,” added McIntosh.
Meta’s problems do not end with antitrust rulings and investigations. The continuous injection of cash into its metaverse product forced Meta to issue its first-ever bond offer, raising $10 billion. Yet, the product appears to be struggling to gain traction according to recent findings published by Wall Street Journal.
Internal Meta documents obtained by the media company showed that Meta’s Horizon Worlds metaverse platform has yet to cross 200,000 active users, which is significantly below the company’s initial forecast for 2022 of 500,000.
Moreover, the platform has also been unable to keep hold of users for more than a month, the documents showed.
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