After a long-running court battle in the UK, Meta has lost its bid to take over leading GIF platform Giphy, which now means that Meta will now be forced to divest the platform, and step away from the $400 million takeover arrangement.
As reported by CNBC:
“Citing the risk of a substantial lessening of competition in the social media and display advertising market, the UK Competition and Markets Authority (CMA) said Tuesday that Meta must “sell GIPHY, in its entirety, to a suitable buyer.”
It’s the first time that a regulatory authority has successfully overturned a big tech deal, which could mark a significant development for ongoing antitrust concerns in the industry. Meta’s also facing an antitrust probe in the US over its past acquisitions of Instagram and WhatsApp.
As a quick recap of the Giphy case – back in 2020, Meta announced that it had acquired Giphy, with a view to integrating Giphy’s network of GIF content into its various tools. That deal was then challenged by the CMA, due to concerns that it would give Meta an unfair advantage in the UK digital ads market.
The case has gone back and forth ever since, and now, Meta’s been told that it has to step away from the deal entirely. Though it may not be as disappointed in the outcome as you would expect.
That’s because GIFs, according to Giphy, just aren’t as cool or popular as they once were. Yes, Giphy said this.
In a recent filing with the CMA, Giphy argued that no company other than Meta that would be willing to buy it either way, because GIFs ‘have fallen out of fashion as a content form, with younger users in particular describing GIFs as ‘for boomers’ and ‘cringe’.’
Giphy itself noted that its valuation has declined by some $200 million from its 2o16 peak, and that its usage rates are in significant decline. As such, Giphy argued, the CMA should let Meta take it over. Because nobody else wants it.
That unorthodox strategy clearly didn’t work – so now, much like Twitter after Elon Musk’s repeated criticisms, leading into his acquisition of the platform, Giphy’s valuation is likely even worse than ever due to misguided internal sabotage, which failed to achieve the desired result.
It’s a lose-lose for the Giphy crew – but for Meta, it may well be a win, because if GIF usage is in decline, as Giphy says, then Meta probably doesn’t want to be in the GIF business anyway.
I mean, it was always a fairly speculative bet in terms of increased monetization – and clearly, GIFs are still widely used either way (even if only by old folk), so a level of opportunity remains in the app. But if there has been a shift away from animated images, then Meta can now step away, and wash its hands of the whole thing. Then it can put that spare $400 million towards, I don’t know, building more 3D replicas of famous landmarks instead.
So, no GIFs for Zuck, but he probably doesn’t care. Also, GIFs aren’t cool, according to the leading GIF platform.
