Similar to their stance on the Microsoft-Activision Blizzard merger, the British competition regulator blocked Meta's acquisition of the 'Gif search engine' in 2021. The Competition and Markets Authority is concerned that Meta's plotted purchase of Giphy will significantly reduce competition within a market or markets in the United Kingdom.
Giphy Pushes Meta Takeover
According to CNBC, Facebook shut down Giphy's advertising services at the time of the merger. This led to the assumption that Facebook (now Meta) would disrupt the online advertising market. According to the CMA, this is cause for concern, especially given that Facebook controls nearly half of the £7 billion ($9.4 billion) display ad market in the United Kingdom.
Over the course of a few years, both Meta and Giphy have filed their appeals to overturn the CMA's remittal. Meta announced in 2020 that it would consider all available options for repealing the inquiry panel's decision.
Gifs are Now Cringe Says Giphy
In a Giphy filing submitted to the CMA on Aug 9, the online database raised an intriguing point to persuade market watchdogs to approve the long-delayed Meta buyout. When entering into transactions, especially acquisitions, companies frequently worry about their public image and valuation. In an attempt to restart the Meta takeover, Giphy told authorities they were out of date.
According to The Guardian, Giphy's valuation has dropped by $200 million since its peak in 2016, and, more importantly, its core offering appears to be going obsolete. The American search engine company implied to authorities that the use of gifs had decreased overall in the last decade. Giphy also noted a lack of enthusiasm and declining interest among its users and content partners.
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Gifs are undeniably an internet artifact that will never be removed from the face of the Internet. This type of media file, which contains short looping videos with no audio, is one of the pillars of today's Internet culture. Giphy was at its peak in the 2010s, when memes were encapsulated in these short videos and added to websites to paint some form of visual communication.
To back up these claims, the online gif database attached a Vice article titled "GIFs Are For Boomers Now, Sorry," and a link to a now-deleted tweet referencing the same statement. "The humble image file was once everywhere," according to the Vice article, "it's increasingly falling out of favor among young internet users."
According to Giphy's filing, fewer content creators see the value in GIFs, and between Oct 2020 and May 2022, fewer GIFs were uploaded to GIPHY overall. Furthermore, between Oct. 2022 and May 2022, GIPHY saw a decline in the number of accounts made by content partners.
Simply put, Giphy told CMA that no company other than Meta is interested in buying the Gif factory. The tech giant's resources can help Giphy retain staff and revive its competitive capability.
