Meta’s failed Giphy deal could end Big Tech’s spending spree


Meta's failed Giphy deal could end Big Tech's spending spree

Daniel Grizelj fake images

Instagram? Sure! WhatsApp Go crazy. But don’t mess with GIFs. That’s the odd position taken by Britain’s competition watchdog in choosing to block Meta’s acquisition of the GIF Giphy repository. Meta, the UK’s Competition and Markets Authority (CMA) ruled, must now sell all GIFs, just 19 months after it allegedly paid $ 400 million for them. It’s a bold move, and a world first. Never before has a tech giant been ordered to push to undo a completed deal rather than pay a fine or make promises about how the newly merged companies would operate. Meta, Facebook’s parent company, is unhappy. A spokesperson says the company disagrees with the decision and is considering all options, including an appeal. Generally a cautious bunch, attorneys agree that the CMA’s decision is a significant moment in Big Tech’s global regulatory dispute, as it means deals that have leaked in the past may now have a new one. barrier to overcome. “He’s found that fairly small deals over the years have not been thoroughly scrutinized,” says Richard Pepper, a partner at the Macfarlanes law firm.

That means regulators around the world will now be on high alert for what the legal world calls “killer acquisitions,” where an established company buys an innovative company in an attempt to crush competition it could represent in the future. The CMA’s decision is also important because Facebook’s acquisition of Instagram was approved by its predecessor, the Office of Fair Trade, in 2012, in what was the highest-profile investigation into the deal outside of the US. “The same law enforcement officials around the world who allowed Facebook to absorb Instagram and WhatsApp are now very wary of even small purchases from major platforms,” ​​says Eleanor Tyler, legal analyst at Bloomberg Law, a research company. legal. “What this shows is a change in attitude, and that is fundamental.”

Compared to some of Meta / Facebook’s other known acquisitions, Giphy is small. WhatsApp cost you $ 19 billion in 2014, Oculus VR was $ 2 billion, also in 2014, and Instagram only $ 715 million in 2012. But regulators are beginning to adopt the attitude that smaller acquisitions can also hurt the competence. “I think of serial acquisitions as a Pac-Man strategy,” Rebecca Slaughter, US Federal Trade Commissioner, said in September. “The collective impact of hundreds of smaller acquisitions can lead to a monopoly giant.”

Giphy might not be the whole game, but it’s arguably a crucial item for Pac-Man – or Meta CEO Mark Zuckerberg – to buy into. When someone on any major social media or messaging platform (TikTok, Twitter, Tinder, Slack, or iMessage) wants to send a GIF, they almost always use animations from Giphy or its main rival, Google-owned Tenor. In a blog post, Meta said it bought Giphy to help Instagram users “express themselves.” The CMA said the deal could result in another side effect: giving Meta power over its competitors to deny them precious GIFs or to demand data in return.

This concern, however, only formed half of the CMA’s argument. While it warned of reducing competition between social media platforms, the regulator simultaneously warned of its impact on a market that does not yet exist. The CMA said that Giphy had the potential to rival Facebook in the UK advertising market had it not been bought. “Before the merger, Giphy had launched innovative advertising services that it was considering expanding to countries outside the United States, including the United Kingdom,” the watchdog said in a statement, citing GIFs that Pepsi and Dunkin ‘Donuts had created to promote. your brands.