Meta mostly fails in appeal against order from UK watchdog to sell Giphy
Might have been a good idea to mention that Snap was sniffing around GIF biz, too, judges note, though
Judges in the UK have dismissed the majority of an appeal made by Facebook parent Meta to overturn a watchdog's decision to order the social media giant to sell Giphy for antitrust reasons.
Facebook acquired GIF-sharing biz Giphy in May 2020. But Blighty's Competition Markets Authority (CMA) wasn't happy with the $400 million deal, arguing it gave Mark Zuckerberg's empire way too much control over the distribution of a lot of GIFs. After the CMA launched an official probe investigating the acquisition last June, it ordered Meta to sell Giphy to prevent Facebook from potentially monopolizing access to the animated images.
Meta appealed the decision to the Competition Appeal Tribunal (CAT), arguing six grounds. All but one of them – known as Ground 4 – were dismissed by the tribunal's judges this week. And even then only one part of Ground 4 was upheld: the second element.
In that element, the CAT acknowledged that the CMA knew Facebook competitor Snap had considered buying Giphy for $142 million and in the end acquired Giphy rival Gfycat in August last year. Crucially, the tribunal sided with Facebook that the CMA had failed to disclose this pertinent info in its reports. The CMA considered this information confidential. Meta could have used that information to bolster its case for its Giphy acquisition, forcing the CMA to better justify its decision.
Additionally, the CMA did not investigate Snap's deal to the same degree as it did Meta's. Although the tribunal sided with Meta on this point, it said that CMA could not be criticized for making "insufficient inquiries of Snap or any other person assuming there was proper consultation."
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The rest of Meta's grounds of appeal were rejected. "We have concluded, however, that the CMA has failed properly to consult and has wrongly excised portions from the decision," the tribunal judgment [PDF] went. What this means for the Meta-Giphy acquisition remains unclear. "We say no more about the remedy that should be ordered, if any, in relation to Meta's success in relation to the second element of Ground 4."
Instead, the CAT said the CMA and Meta should discuss the decision amongst themselves to figure out what happens next. "We invite the parties to consider what consequential orders should be made and – more particularly – to identify how and when the question of remittal can be determined. We consider that this needs to be resolved sooner rather than later," it concluded.
A Meta spokesperson told The Register it still believes it should be allowed to integrate Giphy's technology on Facebook rather than sell it off. "[The] ruling found that the CMA's approach to its investigation was 'difficult to defend' and 'undermines the entirety of the decision'."
"We look forward to understanding how these serious process flaws will be addressed. We firmly believe our investment would enhance Giphy's product for the millions of people, businesses, and partners who use it," a spokesperson declared in a statement.
The CMA was not immediately available for further comment. ®