The United Kingdom’s antitrust watchdog ordered Facebook on Tuesday to sell Giphy, the GIF-sharing platform, because it says the combination would diminish competition in the advertising market.
Facebook, which has reorganized as Meta, moved to acquire Giphy for an estimated $400 million last year. Giphy produces animated images available to share on messaging and social media platforms, such as iMessage on Apple devices and Snapchat.
Britain’s Competition and Markets Authority investigated the acquisition and said Tuesday that it determined Giphy was considering an expansion of its advertising services outside of its U.S. base to the U.K. prior to the combination.
“The CMA found that Giphy’s advertising services had the potential to compete with Facebook’s own display advertising services,” the watchdog said in a statement. “They would have also encouraged greater innovation from others in the market, including social media sites and advertisers. Facebook terminated Giphy’s advertising services at the time of the merger, removing an important source of potential competition.”
The CMA said it concluded its competition concerns could be addressed only by Facebook selling Giphy to an “approved buyer.” The British regulator said it assessed alternative solutions and consulted other businesses before reaching its decision.
A Meta spokesperson said the company disagrees with the decision and is “considering all options, including appeal.”
“Both consumers and Giphy are better off with the support of our infrastructure, talent and resources,” the spokesperson said in a statement. “Together, Meta and Giphy would enhance Giphy’s product for the millions of people, businesses, developers and [application programming interface] partners in the U.K. and around the world who use Giphy every day, providing more choices for everyone.”
As the fight between Facebook and Britain speeds on, the regulatory action will be closely watched by American regulators and policymakers looking for ways to crack down on Facebook and other large tech companies.
American regulators are also pursuing Facebook over allegations of anticompetitive behavior. In August, the Federal Trade Commission revived its lawsuit against Facebook that asserts Facebook acquired tech platforms Instagram and WhatsApp to neutralize competition. The FTC’s August lawsuit filed in the U.S. District Court for the District of Columbia replaced an earlier complaint dismissed by a federal judge.
U.S. lawmakers are set to flay Facebook again on Wednesday during a House Energy and Commerce subcommittee hearing. The hearing is focused on ways to hold “big tech accountable” and will include the input of former Facebook employee Frances Haugen, who previously compared Facebook to tobacco companies when she testified to the Senate.
“Facebook wants you to have analysis paralysis, to get stuck in false choices and to not act here,” reads Ms. Haugen’s prepared remarks for delivery on Wednesday to the communications and technology subcommittee. “But let’s not miss that Facebook programs its algorithms to maximize profits, which means it decides which speakers are heard and which are not. Facebook decides which content is seen by tens of millions and which is buried. The result is a system that amplifies division, extremism, and polarization. Facebook is running the show, whether we know it or not.”
Other global regulatory agencies have pursued Facebook as well. Earlier this year, as the U.K.’s CMA cleared Facebook’s acquisition of Kustomer, a maker of customer service software, the European Union continued its investigation into the acquisition. A decision from the EU is expected to come in January, according to Reuters.