UK antitrust regulator will reevaluate decision to unwind Meta’s Giphy acquisition

POLICY

The U.K.’s antitrust regulator, the Competition and Markets Authority, will reevaluate an order that it issued last year to unwind Meta Platforms Inc.’s acquisition of Giphy.

The CMA announced the move today. The regulator expects to complete its review of the order within three months. 

Giphy is a popular GIF sharing platform that Meta acquired in 2020 for $315 million. Later that year, the CMA launched an antitrust investigation into the deal. The CMA’s investigation concluded that the acquisition would reduce market competition and, in November 2021, the regulator directed Meta to sell Giphy.

Meta responded by filing an appeal with the U.K.’s Competition Appeal Tribunal. The social media giant presented six arguments for why it should not be required to sell Giphy. Five of Meta’s arguments were dismissed by the tribunal, but one was partly accepted, which is the reason why the CMA is now reevaluating its decision to unwind the Giphy deal.

The part of Meta’s appeal that was partly accepted focused on the way that the CMA had managed the case.

After completing its antitrust investigation into the Giphy acquisition, the CMA drafted a set of provisional findings about the deal. The regulator then shared a redacted version of its provisional findings with Meta. In its appeal to the Competition Appeal Tribunal, Meta argued that the fact it had only been given a redacted version of the findings and not the full report is grounds to dismiss the CMA’s decision.

Meta made the point that the redactions “impeded Meta’s ability to respond effectively to the Provisional Findings when seeking to persuade the CMA to change its mind,” the Competition Appeal Tribunal wrote in its 107-page ruling.

The CMA had sought to dismiss Meta’s argument. The regulator contended that the “gist of the CMA’s reasoning had been disclosed; and that Meta was in no way inhibited from responding effectively and had been able to make (and did make) all of the points it properly could,” according to the ruling.

The Competition Appeal Tribunal sided with Meta on the matter. “The redactions applied by the CMA to details forming the reasons for its decision in both the Provisional Findings and to the Decision are difficult to defend,” the tribunal ruled. It’s this development that led the CMA to launch a revaluation of its decision to order the sale of Giphy.

“The CMA won on five of six grounds, with Meta winning one in relation to our process of sharing confidential information,” a CMA spokesperson told TechCrunch. “We have agreed to reconsider our decision in light of this finding. We will commence our review shortly and will seek to complete the remittal within three months of today’s order.”

The development comes a few weeks after Meta reportedly avoided antitrust fines in France by making a series of commitments to regulators. The commitments focus on its ad business. Meta has agreed to make data about ads on its social media platforms accessible to advertising technology companies in a “transparent, objective and predictable” manner for five years.

Image: Meta