UK regulator shows assertive posture in blocking Facebook purchase of Giphy

The UK’s decision to block Facebook owner Meta Platform Inc’s takeover of Giphy signaled a new determination to scrutinize digital deals.

On Thursday, Meta appealed the ruling to the Competition and Markets Authority, which said the 2020 deal must be undone and Giphy is sold as a going concern.

The November decision was the first time the regulator blocked an acquisition by a major technology company.

Under the leadership of CEO Andrea Coscelli, the CMA has intensified its scrutiny of “big technology,” and in particular of Facebook and Google, which dominate digital advertising.

Coscelli has created a digital markets unit and wants it to be backed by new legislation.

Competition attorney Peter Broadhurst, a partner at Crowell & Moring, said Coscelli believed there had been a historical lack of enforcement in digital markets.

“He sees merger control as a quick way for the CMA to do something about it,” he said, adding that the regulator was testing the limits of its jurisdiction and reasoning.

“My opinion is that they are happy to push those limits until they are slapped by the court,” he said.

“That’s his way of figuring out where the limits are.”

Facebook notes that Giphy has no presence, employees, offices or revenue in Britain, and had not launched its fledgling advertising business in the country.

The CMA, which emphasizes that its process is independent, said the deal was firmly within its purview. He noted that UK users search for 1 billion GIFs a month on Giphy, and that 73% of their time on social media is on Meta’s Facebook, Instagram and WhatsApp.

In particular, the CMA was concerned about the potential for Giphy to enter the display advertising sector, even though it had not done so in the UK. The CMA said it wanted to preserve any potential competitor or competitor given Meta’s social media dominance.

AJ Bell financial analyst Danni Hewson said the CMA acted because it felt Facebook and Giphy had the potential to one day become direct competitors. “CIOs (will be looking to) find out exactly how strong the muscles of these regulators are and whether the decision will set a precedent that other regulators will try to follow,” Hewson said.

Broadhurst said the CMA had gone further than ever in pursuing this argument.

“This will create a lot of uncertainty for companies trying to close deals where the parties are not actually competing, but perhaps they could do so in the future, especially when one of them may be important in its own market,” he said.

The Platform Executive team hopes you enjoyed the article ‘UK regulator is assertive in blocking Facebook’s Giphy purchase’. Automatic translation from English to a growing list of languages ​​via Google AI Cloud Translation. Initial reports through our official content partners at Thomson Reuters.

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