Facebook CEO Mark Zuckerberg speaks during a live-streamed virtual and augmented reality conference to announce the rebrand of Facebook as Meta, in this screen grab taken from a video released October 28, 2021.
Facebook | via Reuters

Meta, Facebook’s parent, has been told by the U.K.’s competition watchdog that it must sell gif-sharing platform Giphy.

The Competition and Markets Authority said Tuesday the deal could harm social media users and U.K. advertisers.

Meta did not immediately respond to a CNBC request for comment but the company reportedly told Reuters that it disagrees with the decision.

The regulator concluded that Meta’s acquisition of Giphy would reduce competition between social media platforms. It added that the deal has already removed Giphy as a potential challenger in the display ad market.

A panel found that Facebook would be able to increase its already significant market power in relation to other social media platforms by denying or limiting other platforms’ access to Giphy gifs.

This in turn would send more traffic to Facebook-owned sites – Facebook, WhatsApp and Instagram – which already account for 73% of user time spent on social media in the U.K., the panel concluded.

“We disagree with this decision,” A Meta spokesperson said, according to Reuters. “We are reviewing the decision and considering all options, including appeal.”

In August, the CMA said it had provisionally found Meta’s purchase of Giphy would harm competition between social media platforms and remove a potential challenger in the display ad market.

At the time, the CMA said it may require the company to unwind the deal, which is reportedly worth $400 million, and sell off Giphy if its competition concerns are ultimately confirmed.

When the deal was announced, Facebook said it wanted to further integrate Giphy into the Instagram app “so that people can find just the right way to express themselves.”

The CMA fined Facebook £50.5 million ($67.4 million) in October for failing to provide regular updates to show that it is complying with an order. It said Facebook “significantly limited the scope of those updates” despite repeated warnings.