Facebook is appealing the UK’s ruling that it must sell animated images platform Giphy. Facebook is saying that the evidence does not support the finding that the deal is a threat to its rivals or could impact competition in display advertising, reported Reuters.
Britain’s Competition and Markets Authority (CMA) ordered Meta to sell Giphy, which it acquired for a reported $400 million in May 2020, last month after it decided the remedies offered by the U.S. company did not answer its concerns.
“We are appealing the CMA’s Giphy decision and will seek a stay of the CMA’s order to divest,” a Meta spokesperson said on Thursday. “The decision to block the deal is wrong on the law and the facts, and the evidence does not support the CMA’s conclusions or remedy.”
Half of traffic to Giphy’s huge library of looping videos comes from Meta’s platforms Facebook, Instagram and WhatsApp, per Reuters.
The appeal will go now to the Competition Appeal Tribunal, a specialized court with vast experience in reviewing this type of decisions. The theories of harm that the tribunal will need to analyze are evidence-driven and the regulator may face an uphill road to probe its findings in court. This is because the analysis involves hypothetical scenarios where the court needs to decide what effects the merger would cause in the market, leaving certain discretion for the interpretation of the facts. However, the CMA has been able to prove similar theories of harm in other cases.
The relevance of this case, is not in the case itself, as it is immaterial for Meta, but it is on the consequences that a strict application of competition rules may have for small firms, and venture capital investors, who seek acquisitions as an exit strategy. This is particularly relevant for Giphy, which after 18 months of investigation, may be back to square one looking for alternatives to get funds. While this is not an excuse to allow a more permissible approach by regulators when they find antitrust concerns, it is not the first time that the CMA finds itself in a similar situation.