Meta, the largest provider of social media sites and display advertising in the UK, acquired GIPHY, the largest provider of GIFs. In its report of 30 November 2021 the CMA found that the completed merger between Meta and GIPHY will give rise to a substantial lessening of competition.
The CAT confirmed the CMA’s assessment and dismissed all but one of Meta’s appeal grounds, paving the way for Meta to sell GIPHY, as demanded by the CMA.
PI was granted [permission to intervene]((https://privacyinternational.org/legal-action/meta-platforms-v-competition-and-markets-authority) in this case, one of the first successful applications to intervene before the Tribunal brought by a campaigning organisation. Our intervention ~~in support of the CMA’s position~~ argued that Meta could use GIPHY to further expand, and potentially abuse, its dominance in social media and messaging, as well as digital advertising markets at the expense of consumers and competitors.
While the CAT judgment does not address directly concerns related to data exploitation, it recognises that the CMA correctly assessed the harm to competition which is caused by Meta acquisition of GIPHY. In 2021 the CMA noted how the merger would allow Meta to disadvantage its rivals, including by acquiring data on users’ behaviour and potentially requiring apps to return more users’ data to GIPHY.
Further the CAT found that the remedies ordered by the CMA, namely the divestiture of GIPHY by Meta, were not irrational and were well within its statutory remedial powers. This is an important signal given that big tech companies have developed a tendency of buying smaller companies and competitors to consolidate their market dominance, often expecting no scrutiny from competition authorities or at worst the imposition of conditions or fines that big tech can easily circumvent or afford.
The CAT only upheld one of Meta’s procedural grounds of appeal, in relation to the failure of CMA’s disclosure of certain third-party confidential information. This aspect of the case and its potential implications will be addressed in due course.
Tomaso Falchetta, PI’s Global policy Lead, said: PI welcomes the Tribunal decision. In our intervention we contented that by acquiring GIPHY, Meta would further increase its data dominance and benefit from GIPHY’s data collection capabilities and integration with other services. Further, Meta could limit the ability of rival apps to implement GIPHY or make mandatory the collection of users’ data.
Note to editors
Meta, the largest provider of social media sites and display advertising in the UK, acquired GIPHY, the largest provider of GIFs. GIPHY is a searchable database for Graphic Interchange Format (‘GIF’) files, stickers, emojis, text, videos and Arcade (remixable video games).
On 5 January 2022, Meta Platforms, Inc. (formerly know as Facebook, Inc.) challenged before the Competition Appeal Tribunal the decision of the Competition and Markets Authority (CMA) to require Meta to divest itself of GIPHY.
In its report of 30 November 2021 the CMA found that the completed merger between Meta and GIPHY will give rise to a substantial lessening of competition.
PI is grateful to Hausfeld & Co LLP, as well as Sarah Love and Sophie Bird of Brick Court Chambers, who are representing and providing support to PI with regard to this intervention before the CAT.