Hey, remember how Meta acquired the GIF platform GIPHY in 2020, then didn’t do much with the app and haven’t really changed or integrated it since?
That, at least in part, is because Acquisition of GIPHY by Meta has been challenged in the UKwhich has delayed the full scope of its plans for the GIF platform.
As part of a broader antitrust push, the The UK competition watchdog has sought to force Meta to cancel its $315 million acquisition of GIPHY, due to concerns that the deal would lead to a “substantial lessening of competition” in the UK display ad market. .
Which, given that we’re talking about GIPHY, seems a bit far-fetched, but there’s clearly a case to be made, as this week, a UK court dismissed Meta’s latest appeal against legal action, which puts its acquisition of GIPHY on shaky ground once again.
As reported by The Financial Times:
“the [UK] The Competition Appeals Tribunal unanimously dismissed all but one of Meta’s grounds of appeal, concluding that the Competition and Markets Authority acted rationally when it made the decision last year to sell GIPHY, the largest provider of animated images known as gifs to social networks.”
The core of the case against the Meta acquisition boils down to the use of GIFs for advertising, which could expand Meta’s control of the digital ad market.
GIPHY’s ad options are fairly limited, but in the past it has facilitated brand promotions via GIFs, which under Meta could become a global offering, which could become a more significant element in the larger sphere of digital advertising. It’s not something that’s likely to be on the scale of, say, another social media app or the like, but Meta has the potential to expand its presence in the ad market and that, apparently, is justification enough to block the merger. progressing further, based on this latest finding.
Meta will continue to appeal the case, but its options are becoming more limited, which could eventually force it to sell GIPHY or remove the app from the UK market, if that’s an option it’d rather pursue.
Although how exactly it could work is also complex, as the problem is the general acquisition, which would relate to all markets, not just the UK. But the UK court cannot make blanket rulings. Essentially, the legal technicalities, in this regard, are beyond my understanding of international law, but it appears that Meta may have other avenues to pursue, before having to consider reversing the deal altogether.
In some ways, it seems more of an anti-Meta stance than anti-competition, especially when you also consider that Snapchat was allowed to acquire rival GIF platform Gfycat in 2020. The argument that GIFs could form a more meaningful advertising element is questionable. But with Meta turning previous acquisitions of WhatsApp and Instagram into hugely dominant platforms in their respective sectors, there is a level of concern about whichever platform Meta buys, and how that could expand its already significant market dominance.
Digital advertising accounts for 66% of total ad spend in the UK, with Meta and Google gobbling up the majority of those ad dollars. Given this, you can understand why UK regulators are hesitant to cede any more power in this regard to US tech giants. And while GIPHY may never form a significant part of that overall hype pie, it seems, somehow way, like a line at a time of sand for the local competition.
Which essentially means that GIPHY’s full integration of Meta remains on hold, and we have no real way of knowing what it’s planning, or what it might do next with the app until the legal challenge is resolved.
That means no new GIF tools in your favorite social media apps, and by the time that’s all settled, no one may care about GIFs anyway, as we’ll all be flying around in the metaverse, with cartoony avatars turned into a more popular choice for expression.
Perhaps, then, Meta should just reverse it and save the money, although we also don’t know its full plans for the acquisition, nor the related costs if it eventually has to reverse course.
We now await the next update on the legal process.