In the first-ever antitrust breakup order against big tech in the modern era of social media, Facebook's parent company, Meta, has been ordered to sell Giphy.
Despite falling out of fashion and being derided as "for boomers," the popular animated low-resolution image file format, GIF, is at the center of a stunning breakup order issued by the U.K.'s chief regulator (and after repeated court losses, accepted by Meta). CNN reported today that Tuesday's breakup order pose widespread implications for the entire technology industry and demonstrates that government scrutiny is starting to lead to significant limitations (and consequential court rulings) that limit the scope and activities of giant platform providers, like Google, Microsoft, and Facebook.
Earlier this summer, the United Kingdom's Competition and Markets Authority (CMA) based its decision, which courts repeatedly upheld throughout the summer, on a reduction in competition that would be caused by the likely limiting of access to Facebook's competitors for a major content or communication service (in this case, Giphy, a major central repository of these popular GIFs). Meta bowing to CMA's decision likely heralds a recognition that it has reached (and exceeded) the zenith of its scope. Meta, which is also facing increasingly successful efforts by the United States' Federal Trade Commission to breakup Facebook by forcing the social media giant to sell Instagram and WhatsApp and also blocking proposed acquisitions in virtual reality, has seen its business prospects dimmed as it pivots dramatically from curated social media feeds in Facebook to a risky and unproven gambit with its VR-centric "metaverse."
"Successfully blocking this deal will catch the eyes of the biggest tech companies in the world. [They] have grown significantly through mergers and acquisitions, so this decision has the potential to complicate that strategy."
- Paul Gallant, industry analyst at Cowen Inc.
While the complete breakup of Facebook into its constituent lines of business is a long ways away, the success of regulators in Europe to rein Meta in will likely encourage other authorities across jurisdictions throughout the world to take bolder action to limit the size and scope of these technology behemoths.