The United Kingdom's Competition and Markets Authority announced Tuesday it would require Meta, formerly known as Facebook, to sell Giphy over competitive concerns.
The CMA's decision reflects a rare regulatory blocking of a Big Tech company's acquisition. Such small deals often face little scrutiny, although research by U.S. competition authorities suggests such transactions are key to how the largest tech companies attained their current size.
The U.K. regulator's investigation found that, if Meta were allowed to keep Giphy, the larger company "would be able to increase its already significant market power in relation to other social media platforms." The CMA said Meta could deny, limit or change the terms of access to GIFs by rival platforms like TikTok or Twitter.
The CMA also said that, before the deal was announced, Giphy was providing "innovative" services in the digital ads market that could have put pressure on others in the sector. Meta, though, shuttered the services after the transaction, "removing an important source of potential competition," according to the U.K. body.
Last month, the CMA also fined Facebook nearly 51 million pounds (approximately $67 million) for refusing to provide full information about the steps it was taking to keep the two companies separate.