Meta’s Failed Giphy Deal Could End Big Tech’s Spending Spree

from ars technica

Instagram? Sure! WhatsApp? Go nuts. But don’t mess with GIFs. That’s the strange position taken by Britain’s competition watchdog in choosing to block Meta’s takeover of GIF repository Giphy. Meta, the UK’s Competition and Markets Authority (CMA) ruled, must now sell all the GIFs—just 19 months after it reportedly paid $400 million for them. It’s a bold move—and a global first.

Never before has a tech giant been ordered to press undo on a completed deal rather than pay a fine or make promises about how the newly merged businesses would operate. Meta, the parent company of Facebook, isn’t pleased. A spokesperson says the company disagrees with the decision and that it is considering all options, including an appeal. Usually a cautious bunch, lawyers agree that the CMA’s decision is a significant moment in the global regulatory wrangling of Big Tech, as it means deals that slipped through in the past may now have a new bar to clear. “There’s been a realization that quite small deals over the years have not been scrutinized very extensively,” says Richard Pepper, a partner at the law firm Macfarlanes.

More here.

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4 Comments

  1. This article informs the reader of the dangers of Meta’s (formerly known as Facebook) seemingly small and insignificant acquisitions. “The collective impact of hundreds of smaller acquisitions can lead to a monopolistic behemoth”, says Rebecca Slaughter, US Federal Trade Commissioner. This has already happened. Facebook has been crushing and absorbing all semblances of competition before they can grow into even seedlings. The umbrella of their influence has grown so large that it’s imperative to take action—and the only people who are fighting against the gargantuan company aren’t even from our country…

    As of last month, Facebook was just cockblocked from acquiring Giphy, and by an unlikely hero. The rare nature of the UK’s CMA (Competition and Markets Authority) using their influence to block a move from a company that doesn’t even operate in the parent country is “unusual but not unprecedented”, as said in the above article. Only in times of great need would regulatory organizations overstep the boundaries of their country, and dire times these are indeed; the CMA saw that this exchange would give Facebook leverage over other any other social media platform that giphy operated on, by allowing them to remove “precious gifs” from their competitors or threaten to do so in exchange for data.

    I support the move made by the UK. What with the evidence given by the article of how Facebook bought Instagram when it had 30 million users, and after the acquisition it “mushroomed to above 1 billion” is, frankly, unnerving. It should be to everyone else who reads this article as well; as is mentioned, we could very well be too late with regards to how Facebook was not disputed in acquiring instagram. We have created a monster in our complacency.

    The UK doesn’t operate under the Neo-Libertarian influence that the US suffers from, and I admire their hard work in not only looking after us, but also the entire world from the big business menace; otherwise very soon we may find our entire society ruled by a company like Facebook before we even know it.

  2. The UK’s Competition and Markets Authority, or CMA, only struck down this deal between Giphy and Facebook in anger toward Facebook. Facebook got away with buying Instagram back in 2012 and WhatsApp in 2014. They bought Instagram for 715 million dollars, and Instagram made 20 billion dollars in advertising revenue. The CMA is obviously frustrated by this, or else they would not have struck this deal down. They are even worried about non-competitive deals involving Facebook. Giphy is not a social media where you can make an account and interact with friends. The app is just used for the gifs they provide that you can use in texts or on social media. The deal between Instagram and Facebook reminds me of WCW and WWF. WCW, World Championship Wrestling, and WWF, World Wrestling Federation, were two wrestling companies going head-to-head on Monday nights. Both staples put on a show from eight to ten and competed for the better ratings. The WWF started to pull away from WCW in the ratings, and WCW was trying to get desperate. Vince McMahon, founder of WWF, saw an opportunity and bought WCW, its only main competitor. The circumstances were different, but the outcome was the same. Instagram had not hit its stride yet, but Facebook saw an opportunity to gain its biggest competitor. The interesting part about the WWF and WCW battle is that wrestling fans to this day say that was best years of wrestling of all time. Obviously, the deals benefited Facebook and the WWF, but it might have ruined the customers’ experience in the future. However, Giphy is not a main competitor to Facebook, or even a competitor at all. The CMA is just trying to rewrite their mistakes, but it might be too late.

  3. The UK’s Competition and Markets Authority (CMA) in Britain ruled that Meta (formerly known as Facebook) must sell all the GIFs it has. This decision goes against the recent deal when Facebook paid 400 million to obtain these GIFs. These initiatives are being implemented to prevent established companies from buying out unique startups. The goal of this technique is to prevent competition in the future. Facebook has incorporated this concept various times in the past with no consequence and millions in profit. They bought WhatsApp in 2014 for $19 billion, Oculus VR for $2 billion in 2014, and Instagram for $715 million in 2012. Currently, Instagram is now worth an estimated value of $102 billion. In addition, Whatsapp makes $15 billion in revenue, making it a profitable deal. Meta has prevented competition by purchasing smaller companies. The cumulative effect can lead to a monopoly over the industry. CMA is taking a firm stand in preventing monopolistic principles from spreading and promoting new business ideas.

  4. Jimmy, I liked the data you included in your comment. There’s a lot of valuable information here, but what story does it tell? I would like to see more of your personal thoughts on what the effect Facebook’s monopolistic behaviors will have on similar companies, as well as us members of the general public.

    I personally think that if Meta’s assimilation of seedling companies continues then our society will very well transition from subtle Neo-Liberalism to essential totalitarian capitalism. I did some research outside of this article, and Facebook and Google, the two biggest competitors in advertising, have sworn not to compete. This collusion is a blatant antitrust violation. Google argues that “the complaint misrepresents [their] business, products and motives,” and are moving to dismiss it. Behavior like this can not be tolerated by our government, and action should be taken immediately. I hope action will be taken soon, if lobbying hasn’t corrupted our government to such a degree that no action can be taken against these tech giants.

    So what do you think? Are we safe for the time being, or should immediate action be taken before Meta assimilates one too many companies? Or are we already beyond the event horizon?

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