Facebook owner Meta has begun its appeal against a UK regulator’s ruling that it must sell Giphy, arguing that the fact rival Snap made a lower offer to purchase the animated gif distributor undermined the arguments used to justify the decision.
The Competition and Markets Authority (CMA) had ordered Meta to sell Giphy last year, stating that the 2020 acquisition removed a potential display advertising competitor and raised the possibility of Meta restricting access to gifs on other platforms.
The ruling was the first time a regulator has blocked a major digital acquisition in the UK, indicative of current political focus on “wheeling in” big tech firms that many worry are accumulating too much power.
Meta has fought back especially hard against the first point, noting that Giphy’s monetization strategy was in its early stages and by no means guaranteed to flourish.
On the first day of the hearing at the Competition Appeal Tribunal, Meta’s lawyer Daniel Jowell said the CMA had hidden the fact that Meta’s rival Snap had made an informal offer to buy Giphy for 14 months.
The valuation of the Snap offer was $142 million, less than half the $315 million offered by Meta.
Jowell argued that the low valuation indicated a lack of belief in the monetization potential of the platform, supporting his client’s position.
He said that it was clear that advertising revenue was “not the motivation for Snap in having an interest in purchasing Giphy”.
Snap went on to acquire Gfycat, a competitor to Giphy.
A spokesperson for Meta said that the information which had now been made public backed the company’s decision to appeal against the ruling.
“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,” the spokesperson said.