United Kingdom move to unwind Facebook’s acquisition of Giphy raises the possibility of a new world where many different international regulators can block tech deals.
Why is it important: It’s the first time a foreign competition authority has ordered a Big Tech company to sell an asset.
- Sam Bowman, director of competition policy at the Center for International Law and Economics, said the UK could pioneer a “veto-like” system for global competition authorities. The European Union and the United States are also trying to relax the rules for reviewing agreements over competition concerns.
Detail: British regulators said: $400 million merger Its conclusion in 2020 was anti-competitive because Facebook could theoretically increase its market power by “blocking or limiting other platforms’ access to Giphy GIFs” or “changing terms of access” to its GIFs for competitive sites.
- They also said that Facebook will shut down Giphy’s advertising business, thus eliminating Giphy’s competition with Facebook’s advertising business.
- “CMA [the U.K.’s Competition and Market Authority] “If our gang was responsible when the Instagram and WhatsApp deals took place, we would have looked into it further,” Bowman says in retrospect. “This is our attempt to correct and change precedent.”
What they say: “It’s true in principle that the UK competition authority can review agreements, but when that’s 100 [countries] Doing the same thing potentially renders nearly every deal void, Bowman said.
- “It may encourage other competition authorities to be a little more aggressive, but everyone is working within their own legal rules,” said Peter Broadhurst, a London-based competition lawyer.
Other side: “We disagree with this decision. We are reviewing the decision and considering all options, including appeals. With the support of our infrastructure, talent and resources, both consumers and Giphy are better off,” Meta (formerly Facebook) said in a statement.
- Bowman said the decision could also spook startups that see the UK as a market: “In the long run, we need to think about the implications of this for startups and the next Giphy want to buy, and if you want to avoid that risk, don’t supply to UK users.”
flashback: In 2020, CMA blocks an airline reservation software mergermay result in less innovation and higher wages in the market.
What are we watching: If Meta decides to appeal on jurisdiction and/or merits, it will go to the UK Competition Appeals Court, which may reaffirm the CMA’s decision or propose an alternative remedy.
- If Meta loses on appeal, it may choose to terminate services in the UK altogether to avoid compliance, but observers consider this unlikely.