Meta ordered to sell Giphy by UK regulator

[Lightwreather]

Summary

The UK’s competition regulator has officially ruled that Facebook parent company Meta’s acquisition of Giphy should be unwound, a year and a half after the social media giant first said it was acquiring the popular GIF-making and sharing website.

 

Quotes

Quote

In a press release, the Competition and Markets Authority (CMA) said that it had come to the decision after its investigation found an acquisition could harm competition between social media platforms, and that its concerns “can only be addressed by Facebook selling Giphy in its entirety to an approved buyer.”

The CMA said the acquisition could be used to deny or limit other platforms’ access to Giphy GIFs and drive more traffic to Facebook, WhatsApp, and Instagram. It also raised concerns that it could be used to require other platforms to provide more data to access the GIFs. Finally, the CMA also believes that Giphy’s advertising services could have competed with Meta’s, but that these were shuttered as a result of the merger.

“The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market,” the chair of the independent inquiry group Stuart McIntosh said in a statement, referring to Meta. “Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs.”

“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising,” McInosh said.

This would be the first time the CMA has attempted to unwind a completed acquisition by a tech giant, the Financial Times previously reported. Although Meta is likely to appeal the decision, the UK regulator’s decision sets a notable precedent for future big tech purchases.

 

My thoughts

So, I don't really know what position Giphy was in before the acquisition by Facebo- Sorry- "Meta" (since I wasn't really into the tech space at the time) but from what I can gather it was doing relatively Okay. If what the CMA says is true, then, hooray more competition on the market (altho, I don't really know what we're getting from another advert company). But whoever is in the right, this will likely create an interesting precendent for Tech acquisitions

 

Sources

TheVerge

CMA

[WolframaticAlpha]

I never understood facebook's rationale behind buying giphy

[Fasterthannothing]

Wait why reverse this. Look I don't like Facebook buying everything in sight anymore than the next person but they already went through with the sale and had permission the first time to purchase it. I have issues with the government telling people what to do with their property. If they thought it was a bad thing then they shouldn't have allowed the sale in the first place.

[Mark Kaine]

1 hour ago, WolframaticAlpha said:

I never understood facebook's rationale behind buying giphy

More data collection simply.  They also made it so that you have to "sign up" now to upload gifs... haven't used the service since.

[LAwLz]

29 minutes ago, SlidewaysZ said:

Wait why reverse this. Look I don't like Facebook buying everything in sight anymore than the next person but they already went through with the sale and had permission the first time to purchase it. I have issues with the government telling people what to do with their property. If they thought it was a bad thing then they shouldn't have allowed the sale in the first place.

I kind of agree, but at the same time, if we realize something is a mistake then why not fix it?

I think this particular case is kind of weird since I don't see any issue with Meta owning Giphy (Facebook buying Instagram should have been a much bigger issue), but I don't think we should just roll over and never fix any issues/mistakes just because they have already happened.

 

 

I mean, companies used to sell fake snow made out of asbestos, back when we didn't know the dangers of it. Should we just have allowed the company to keep making that product after it was discovered that asbestos was highly cancerogenic just because "well the company has developed a product, we can't tell them to just stop selling it. It would ruin the company!"?

[dalekphalm]

On a personal level, I don't care if Meta owns Giphy or not, so long as integrated Giphy search is available on the platforms I already use it on.

 

However, if they've determined that this gives Facebook an unfair advantage? Sure, force the sale.

[CT854]

2 hours ago, SlidewaysZ said:

I have issues with the government telling people what to do with their property. If they thought it was a bad thing then they shouldn't have allowed the sale in the first place.

Hindsight is 20/20. If all government decisions were final, then lots of archiac laws wouldn't have been repealed.

 

Besides, governments already tell us what we can or can't do with our property all the time. I can't use a kitchen knife as a weapon, for instance, under penalty of law under either an assault/battery, or, worst case, murder statue. If you're a company as impactful as Facebo- uh, Meta, and you know your moves will affect the integrity of a market that affects millions of people, shouldn't someone be responsible for calling out harmful decisions? Regulations, in principle, exist so companies can't do whatever the hell they wanted for profit regardless of the consequences. Just like @LAwLzsaid, I think the decision to regulate asbestos after we discovered its carcinogenicity is an overall good move.

[dalekphalm]

3 hours ago, SlidewaysZ said:

Wait why reverse this.

Because sometimes people make the wrong decision, and realize it only after the fact.

3 hours ago, SlidewaysZ said:

Look I don't like Facebook buying everything in sight anymore than the next person but they already went through with the sale and had permission the first time to purchase it.

This is true - but ultimately you shouldn't look at it as "they already got permission", but rather "should they have gotten permission?"

3 hours ago, SlidewaysZ said:

I have issues with the government telling people what to do with their property.

Why? Government does that literally all the time - it's a fundamental aspect of any civilization. We should certainly limit how much a government can interfere with this, but for a society to function well, the government needs to be able to tell people what to do with their property, to some degree or another.

3 hours ago, SlidewaysZ said:

If they thought it was a bad thing then they shouldn't have allowed the sale in the first place.

Hindsight is 20/20. Easy to say after the fact, but are you really arguing that we should never ever reverse decisions that were made in error?

[Kisai]

11 hours ago, WolframaticAlpha said:

I never understood facebook's rationale behind buying giphy

It should have been obvious. To harm twitter. What do you think the "gif" button does?

 

 

[poochyena]

I never knew they owned them. huh.

11 hours ago, WolframaticAlpha said:

I never understood facebook's rationale behind buying giphy

I remember when they bought instagram for $1b and everyone thought that was insane.

[Roswell]

Kinda funny. Facebook isn’t going to abide by the ruling obviously, UK law has no teeth against US based companies.

 

I somewhat question why they’re wasting taxpayer dollars on a frivolous case that will never result in change since they have no real means of enforcing this.

[mr moose]

10 hours ago, LAwLz said:

I kind of agree, but at the same time, if we realize something is a mistake then why not fix it?

I think this particular case is kind of weird since I don't see any issue with Meta owning Giphy (Facebook buying Instagram should have been a much bigger issue), but I don't think we should just roll over and never fix any issues/mistakes just because they have already happened.

 

 

I mean, companies used to sell fake snow made out of asbestos, back when we didn't know the dangers of it. Should we just have allowed the company to keep making that product after it was discovered that asbestos was highly cancerogenic just because "well the company has developed a product, we can't tell them to just stop selling it. It would ruin the company!"?

Or even to allow pharmaceuticals to keep selling medication we have discovered isn't effective.  Reversing a decision does not mean the original decision was bad or made in willful ignorance, it just means we now know something we didn't before and shouldn't let it continue.  

 

 

[mr moose]

43 minutes ago, Roswell said:

Kinda funny. Facebook isn’t going to abide by the ruling obviously, UK law has no teeth against US based companies.

 

I somewhat question why they’re wasting taxpayer dollars on a frivolous case that will never result in change since they have no real means of enforcing this.

They do in the UK,  They may not be able to force a change in the US, but it will change how they operate in the UK.  Just like Australian consumer laws changed the way steam operates in the Aus (then in most other parts of the world). 

[Derangel]

1 hour ago, Roswell said:

Kinda funny. Facebook isn’t going to abide by the ruling obviously, UK law has no teeth against US based companies.

 

I somewhat question why they’re wasting taxpayer dollars on a frivolous case that will never result in change since they have no real means of enforcing this.

That’s not how the international market works. Meta operates in the UK and are bound by the laws of the land. The UK had to approve the purchase originally and have the power to rescind the decision.

[Roswell]

1 hour ago, mr moose said:

They do in the UK,  They may not be able to force a change in the US, but it will change how they operate in the UK.  Just like Australian consumer laws changed the way steam operates in the Aus (then in most other parts of the world). 

 

1 hour ago, Derangel said:

That’s not how the international market works. Meta operates in the UK and are bound by the laws of the land. The UK had to approve the purchase originally and have the power to rescind the decision.

They have no jurisdiction over US companies and can’t force them to break up. They can certainly ask, which they did, but they have no ability to enforce it. This happens all the time with zero consequence when businesses disregard them.

 

The most the UK can do is prevent them from operating there. Which… has no bite because Facebook doesn’t need physical access to the country to serve their population from surrounding areas.

[mr moose]

24 minutes ago, Roswell said:

 

They have no jurisdiction over US companies and can’t force them to break up. They can certainly ask, which they did, but they have no ability to enforce it. This happens all the time with zero consequence when businesses disregard them.

 

The most the UK can do is prevent them from operating there. Which… has no bite because Facebook doesn’t need physical access to the country to serve their population from surrounding areas.

That's not how it works though,  They can fine Facebook each and every time they try to operate within the UK.   The only way facebook can earn revenue from the UK is if they do business there.  Really the choice for facebook is to sell the UK branch of giphy or not trade in the UK. 

[IAmAndre]

13 hours ago, LAwLz said:

mean, companies used to sell fake snow made out of asbestos, back when we didn't know the dangers of it. Should we just have allowed the company to keep making that product after it was discovered that asbestos was highly cancerogenic just because "well the company has developed a product, we can't tell them to just stop selling it. It would ruin the company!"?

That's not a good example. You're comparing a public health issue that everyone can agree on to a business decision. My issue with that is that it creates a precedent and from now on any acquisition can be considered as temporary, and valid until the authorities decide that it's bad for the market. In other words, depending on the evolution of the market, the authorities may decide unilaterally what companies should do with their acquisitions.

[CarlBar]

40 minutes ago, IAmAndre said:

My issue with that is that it creates a precedent and from now on any acquisition can be considered as temporary, and valid until the authorities decide that it's bad for the market.

 

So exactly like it allready was? This sort of forced breakup has happened many times before.

 

A business does it's business in a particular way in a given country solely at the discretion of that country. That country can allways step in and force them to either do business differently or leave if they feel it's in their countries interests. You rarely see that type of action used for various good reasons. But it's allways been the case.

 

@Roswell First the US and UK are pretty good allies, the US government probably would step in to help with enforcement, but even if they didn't, worst comes to worst, (this is pretty much the strongest civil option the UK has so it would take a lot to push them this far), the UK could just blacklist Meta. Cutting them off from all the companies, (especially financial institutions based in the City of London), in the UK would make their life very unpleasant indeed.

[mr moose]

2 hours ago, IAmAndre said:

That's not a good example. You're comparing a public health issue that everyone can agree on to a business decision. My issue with that is that it creates a precedent and from now on any acquisition can be considered as temporary, and valid until the authorities decide that it's bad for the market. In other words, depending on the evolution of the market, the authorities may decide unilaterally what companies should do with their acquisitions.

LAwLz example was not supposed to be analogous to meta and giphy, it was supposed to highlight the reason no government decision on regulation is concrete.    People seem to think that these descions are absolute or that they are infallible, neither are true and never have been. 

[LAwLz]

2 hours ago, mr moose said:

LAwLz example was not supposed to be analogous to meta and giphy, it was supposed to highlight the reason no government decision on regulation is concrete.    People seem to think that these descions are absolute or that they are infallible, neither are true and never have been. 

On top of what you said, my point was also that we shouldn't let companies do whatever they feel like just because "changing things might harm a company".

At the end of the day, laws and regulations exist to serve people, not companies,  and if something bad is harming people then it needs to change.

 

Like I said, I don't care about Giphy and Meta so I think this is a bad example, but if the story had been about Instagram having to be broken up from Meta/Facebook then I would be in favor of it, even though it would harm both companies. Since it would most likely benefit people and the free market (free market != unregulated market).

 

I feel like sometimes people end up in a situation where they are viewing companies as people, and thinks that any law that harms a company is automatically bad. "The government can't do X because it would harm company Y".

Laws are not intended to serve companies. They are intended to serve people. If it is discovered that something is harming people for the benefit of a company then I say fuck the company.

Whenever you have to compare the benefits of a company vs the harm (be it physical, mental, monetary, or some other type of harm) it does to people, the company is an extremely low priority.

[Paul Thexton]

On 11/30/2021 at 1:31 PM, LAwLz said:

 

That is genuinely terrifying, never knew that was a thing

[Derangel]

19 hours ago, Roswell said:

 

They have no jurisdiction over US companies and can’t force them to break up. They can certainly ask, which they did, but they have no ability to enforce it. This happens all the time with zero consequence when businesses disregard them.

 

The most the UK can do is prevent them from operating there. Which… has no bite because Facebook doesn’t need physical access to the country to serve their population from surrounding areas.

Incorrect. Any company that does business in a country MUST abide by the laws of that country. That is how international commerce works. Outside of challenging the ruling in court, Meta can either do what they’re told or cease doing ANY business in the UK. Ignoring the order will make the government levy fines at Meta, which they will have to pay.