Facebook has been ordered to sell the animated gif service Giphy by the competition watchdog in its biggest intervention against a Silicon Valley giant yet.
The company now known as Meta has been told to unwind its $315m (£236m) acquisition of Giphy, which was completed last year, after the Competition and Markets Authority found the deal could harm Facebook’s rivals and allow it to control more of the digital advertising market.
It is the most significant order from the regulator against a US technology company since it gained more control over competition issues after Brexit.
Stuart McIntosh, who led the CMA’s investigation, warned that the deal could “allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy Gifs”.
Facebook said it disagreed with the decision and was considering appealing against the ruling.
“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 spokesman said.
“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.”
Giphy is the world’s biggest database of animated gifs, which are used across social media and messaging apps, and allows users to share them to other social networks.
The CMA said Facebook’s ownership of the company could give it vital insights into how consumers were using other services, or that it could cut off rival services’ access to Giphy.
The regulator also said that the deal removed Giphy as an advertising competitor to Facebook, which owns Instagram and WhatsApp.
The CMA ordered Facebook to keep Giphy as a separate company in June 2020 and issued a £50.5m fine last month for failing to provide information showing it had complied with the order.
Remedies proposed by Facebook, such as a promise to keep the service open to rivals, were not sufficient to address the competition concerns, the regulator added.
The CMA has opened several competition investigations against major technology companies in recent months. It is assessing Apple and Google’s control of mobile services such as app stores, and recently reached agreements with Google over changes it was making to the Chrome web browser.
It is separately investigating Facebook’s Marketplace and dating service to assess whether they give the company an unfair advantage in advertising.
“By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising,” Mr McIntosh said.