Meta Platforms says it will sell Giphy after UK regulator orders it to do so (update)
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Meta Platforms (NASDAQ:META) said on Tuesday that it would sell animated search engine Giphy after it was ordered to do so by the U.K.'s Competition and Markets Authority on grounds that the deal could limit other social media networks access to GIFs, harming U.K. social media users.
In a statement to The Verge, a Meta (META) spokesperson said the company was "disappointed by the CMAâs decision" but would accept the ruling "as the final word on the matter. We will work closely with the CMA on divesting Giphy."
The CMA said on Tuesday that by limiting access to GIFs, Meta Platforms (META) could make other social networks "less attractive to users and less competitive." The agency added the deal removed Giphy as a potential challenger in the U.K. displaying ad market, stifling innovation.
The CMA pointed out that Meta (META) controls roughly half of the Â£7B display advertising market in the U.K.
"The CMA has concluded the only way to avoid the significant impact the deal would have on competition is for Giphy to be sold off in its entirety to an approved buyer," the regulatory agency said in a statement.
In July, the acquisition of Giphy by Meta Platforms (META) Facebook unit was given a reprieve after Britain's Competition Appeals Tribunal challenged the findings of the CMA. 
The Competition Appeals Tribunal found that the CMA had "failed properly to consult" and had "wrongly excised portions from its decision." The CMA said it would reconsider its ruling.
Since then, an independent CMA panel found that if Meta Platforms (META) denied or limited other access to Giphy GIFs, it could push people to use the company's-owned sites more often, as they make up 73% of time spent on social media in the U.K. 
There were also worries that it could require Giphy customers, including ByteDance (BDNCE)-owned TikTok, Twitter (TWTR) and Snap's (SNAP) Snapchat to provide more data from U.K. users to access Giphy's GIFs.
Animated GIF search engine Giphy was acquired by Meta Platforms (META) in 2020 for approximately $400M.
Last week, investment firm Bernstein named Meta Platforms (META) its top pick.