Meta Unloads Giphy, Is Out Hundreds of Millions

In 2020, Meta scooped up Giphy, a GIF search engine used by Facebook, Instagram, TikTok, and other platforms, for $400 million. On Tuesday, Facebook's parent company announced it had sold the product to stock image service Shutterstock for a mere $53 million—effectively taking a nearly $350 million loss. The AP reports that Shutterstock is paying cash in the deal, and Meta will still be able to access Giphy content across all its platforms. While Shutterstock CEO Paul Hennessy praises the new deal as "an exciting next step in Shutterstock's journey as an end-to-end creative platform," it's been a more disappointing ride for Meta, whose high hopes for Giphy were dashed by British regulators, per the Guardian.

After Meta announced it was buying Giphy three years ago, the UK's Competition and Markets Authority watchdog became concerned about antitrust issues and, in November 2021, the regulator ordered Meta to divest itself of its new purchase. Meta appealed that decision last year and fought the forced sale, arguing in its filing to the CMA that GIFs weren't as trendy anymore, "with younger users in particular describing GIFs as 'for boomers' and 'cringe.'" It added that Giphy wouldn't make it on its own, and that only "weak or inappropriate" buyers would be interested in taking Giphy off of Meta's hands. Meta lost its appeal, with the CMA noting that "the only way to avoid the significant impact the deal would have on competition" would be for Meta to sell Giphy, per the AP.

In addition to losing more than 85% of what it initially paid, Meta has also been hit with more than $70 million in fines from the CMA for going ahead with a merger without approval, reports Ars Technica. "It was Facebook's decision to complete the merger before getting CMA clearance," Tom Smith, an ex-CMA legal director, tells TechCrunch, adding that the UK allows companies to make acquisitions ahead of regulatory approval. "You can complete your merger, but the trouble is, if you do complete your merger, you take the risk that the CMA will start investigating after the fact." Shutterstock says the deal is set to close next month, "subject to customary closing conditions," per Ars Technica. (More Meta stories.)