A UK appeals tribunal has upheld a ruling requiring Facebook parent company Meta to sell short video archive Giphy.

With most of the Competition and Markets Authority’s (CMA’s) claims against Meta upheld, the social media giant is unlikely to overturn the ruling and will need to unwind its deal.

Meta bought Giphy back in May 2020 for $400 million, when the company was still called Facebook. The deal aimed to integrate Giphy’s GIF catalogue with Meta’s social media platforms.

However, the purchase soon raised competition concerns, with the CMA warning Meta’s control of the video search engine could sway people away from other social media platforms.

With Giphy offering the largest library of GIFs, and the ability for users to create their own, giving control of that to a social media platform meant it could restrict the choice or quality of GIFs to different sites, even denying them access altogether.

With Meta’s platforms, Facebook, WhatsApp, and Instagram, dominating people’s social media usage, should the company control Giphy, the CMA warned it would have an advantage over other platforms.

An injunction was put on the deal to allow for an investigation, but the CMA later said that Meta refused to aid investigators by providing adequate updates. This led to the company being hit with a £50 million fine.

Finally, in November 2021, the CMA ordered that Meta would have to sell Giphy. While Meta appealed the decision, the Competition Appeal Tribunal (CAT) upheld most of the claims against the company.

In particular, the CAT noted that it had “no hesitation” in agreeing with the CMA’s finding that the merger between Meta and Giphy substantially reduced dynamic competition was lawful.

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CMA Chief Executive Andrea Coscelli said: “We welcome this resounding endorsement by the Competition Appeal Tribunal of the CMA’s approach to reviewing mergers that may harm innovation.

“Innovation is a vital part of the competitive process, particularly in digital markets. We also welcome the Tribunal’s endorsement of the ‘care and careful consideration’ given to this issue by the independent Inquiry Group in this case.

“This judgment helps reinforce our ability to protect competition and innovation in digital markets.”

But this still might not be the end of the Meta-Giphy purchase. The CMA made six claims against Meta, but tribunal only upheld five of them.

The tribunal said that the CMA had not properly informed Meta of a similar deal, where Snapchat bought Gfycat, a similar GIF service, for almost a year after it learned of the ruling. This undermined Meta’s defence, and so the court will need to decide on how to remediate this error.

A ruling should be made in the coming weeks.

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