Meta has been ordered to sell Giphy after the UK's top antitrust watchdog ruled the $400 million deal could harm social media users

• The UK's antitrust regulator has ordered Meta to sell Giphy.
• Meta, formerly known as Facebook, bought Giphy for $400 million in May 2020.

The UK's antitrust regulator issued a ruling Tuesday saying Meta, formerly Facebook, must sell Giphy, the gif-database company it bought for $400 million in May 2020.

"The Competition and Markets Authority (CMA) has today concluded that Facebook's acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market," the CMA said in a statement issued to Insider.

The CMA said the merger could give Meta the power to limit or block other social media platforms from accessing Giphy.

It added that Meta could potentially require rival social media platforms including TikTok, Twitter, and Snapchat, to provide user data in exchange for access to Giphy.

The CMA also said that by buying Giphy, Meta had effectively removed a competitor in the display advertising market.

"Facebook terminated Giphy's advertising services at the time of the merger, removing an important source of potential competition. The CMA considers this particularly concerning given that Facebook controls nearly half of the £7 billion [$9.4 billion] display advertising market in the UK," the CMA said in its statement.

Meta said it did not agree with the regulator's decision in a statement sent to Insider following the announcement.

"We are reviewing the decision and considering all options, including appeal. Both consumers and GIPHY are better off with the support of our infrastructure, talent, and resources," a Meta spokesperson told Insider.

"Together, Meta and GIPHY would enhance GIPHY's product for the millions of people, businesses, developers and API partners in the UK and around the world who use GIPHY every day, providing more choices for everyone," they added.

The CMA's ruling aligned with a provisional finding it issued in August. The regulator opened its inquiry in June 2020, one month after the merger was announced.

Prof. Greg Taylor, an associate professor of economics at the Oxford Internet Institute, told Insider the ruling could mark a shift in how tightly regulators scrutinize acquisitions by Big Tech companies.

"Competition authorities have so far been quite permissive on tech mergers, but have faced growing pressure to take a tougher stance. Authorities around the world have been working to tighten the rules governing tech in the last two years, and the CMA's latest ruling seems like a clear signal that Meta and other large tech firms should prepare for stricter scrutiny of future deals," said Taylor.

Meta has come under heightened antitrust scrutiny from lawmakers over the last few years — with a particular focus on its acquisitions. In July 2020 chair of the US House antitrust subcommittee Rep. David Cicilline said the company should be broken up.