Giphy is putting its solid reputation to good use. Meta acquired the company, known for its library of GIFs and video clips, for $400 million in May 2020. But last November, the U.K.’s Competition and Markets Authority ordered Meta, which owns Facebook , Instagram and WhatsApp, which sold Giphy.
Appealing the antitrust ruling in filings last month, Giphy argued that GIF usage has seen a “general decline” and “diminishing” interest among users and content partners, with fewer uploads to its platform in recent years. The company also called its platform “outdated,” arguing that younger users find it “creepy” and more suited to baby boomers.
It’s a tough argument to make when Meta paid so much for the company. At the time of the purchase, Meta said GIFs would help users have more entertaining conversations on its platforms.
However, last November the watchdog argued that it was “protecting millions of social media users and promoting competition and innovation in digital advertising”. He said the acquisition eliminated Giphy as a “potential challenger” in the display advertising market, about half of which Facebook/Meta already controlled.
It also said that with the deal, Meta was “denying or limiting other platforms’ access to Giphy’s GIFs, driving more traffic to [Meta-owned] websites (Facebook, WhatsApp and Instagram), which already account for 73% of users’ time spent on social media in the UK.”
He said Meta was also “changing the terms of access, for example, requiring TikTok, Twitter and Snapchat to provide more user data to access Giphy’s GIFs.”
The watchdog acknowledged that the GIF format was invented in the 1980s, a fact that would seem to further support Giphy’s argument of being obsolete. But he also noted:
“The emergence of social media provided an opportunity to reimagine the GIF as part of modern Internet culture. The major GIF libraries in use today were launched less than ten years ago, and the popularity of GIF has grown enormously since then. Every day, millions of users in the UK post content that includes a GIF.”
As for why a British regulator would order US-based companies, the agency explained, the important question is whether the merger “may have an impact on competition in the UK”.
It’s already been a tough year for Meta, with its share price falling and profits shrinking. This month, the Wall Street Journal reported that the company eliminated its responsible innovation team, charged with addressing ethical concerns about its products.
Last year, Margaret Stewart, a vice president who established the team, wrote that she was “optimistic” that the group would help Meta “proactively surface and address potential harms to society in everything we build.”
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