The British justice system must decide on the acquisition of Giphy by Meta
Facebook, now META was in court on Monday, April 25 to try to overturn a decision by the British competition watchdog (CMA) that requires it to abandon its merger with the specialist of short animations on the Internet Giphy.
Meta Group is appealing in a four-day trial before the Competition Appeal Tribunal in London. The decision will not necessarily be made at the end of the hearing and could also be appealed.
The CMA had estimated in November that this takeover in May 2020 for 315 million USD and shares of Facebook could harm online advertisers as well as users and had asked the social networking giant to sell Giphy.
After a nine-month investigation that led the CMA to review more than 280,000 internal documents at Meta and Giphy, the regulator had said it was concerned that the acquisition would further Facebook’s already dominant market position in online advertising and relative to other social networks.
“The merger combined Meta’s significant market power (…) with Giphy’s position as the leading provider” of “gifs” (an animated image format) in the U.K., the CMA said Monday (April 25) in a forwarded statement.
“By requiring Meta to sell Giphy, we are encouraging competition and innovation in digital advertising and ensuring that rival social networks can gain competitive access to Giphy’s services,” it added.
Meta’s lawyers argued on Monday morning (April 25) that the UK regulator had failed to demonstrate the competition concerns cited, saying in a statement that “the decision to block the (Giphy purchase) agreement was wrong in law and fact.”
Despite the number of documents reviewed, the CMA “did not find a single one showing that Meta considered Giphy a threatening competitor” at the time of the merger in the online advertising market, argued attorney Daniel Jowell at the hearing.
He also pointed out that the platform had not received any other firm offer to buy, which he said showed that its growth prospects in the UK advertising market were not necessarily anticipated as stratospheric.
An alternative proposal of USD 142 million had been considered by Snap, the parent company of the social network Snapchat, but the latter had finally set its sights on Gyfcat, a platform competing with Giphy, according to a source close to Meta.
According to the same source, the presence on the market of Gyfcat, but also of Tenor, which belongs to Google, is also likely to ensure access to other platforms for gifs, which was another fear of the CMA.
For Meta, the acquisition was, among other things, a way to integrate Giphy’s huge library into Instagram, its photo and video sharing service.
Founded in 2013 and based in New York, Giphy is one of the leading gifs sharing platforms, claiming over 700 million daily users.