Meta sells Giphy to Shutterstock at a $260m loss
Image credit: Photo 227324814 © Viewimage | Dreamstime.com
Facebook parent Meta has sold animated-gif search engine Giphy at a loss after a UK regulator blocked its acquisition of the company.
Stock-photo website Shutterstock has agreed to buy the short video platform for $53m (£42m) in cash, despite Meta paying $400m for it in 2020.
The news comes after the UK's Competition and Markets Authority (CMA) ordered Facebook's parent company to sell Giphy, over fears that it could deny or limit competitors such as Snapchat, TikTok and Twitter access to the target's content.
Meta tried to appeal the regulator's decision, describing the enforcement order as “excessively broad” and applied “indiscriminately” to its global business. It also argued that gifs "have fallen out of fashion as a content form, with younger users in particular describing gifs as 'for boomers' and 'cringe'".
Nonetheless, the British court dismissed the appeal and criticised the company for failing to engage properly with the CMA. Last October, Meta agreed to accept the CMA's order and began looking for buyers for the platform after the regulator reissued its order at the beginning of this year.
Giphy is the main supplier of animated gifs and stickers for social media platforms. Every day, the company receives over 1.3 billion search queries, the company said, and its content is shared over 15 billion times.
As part of the deal with Shutterstock, Meta's social media platforms (Facebook, Instagram and WhatsApp) will still be able to access Giphy's content. The deal is expected to be signed in June.
"This is an exciting next step in Shutterstock's journey as an end-to-end creative platform," said Shutterstock CEO Paul Hennessy. “Through the Giphy acquisition, we are extending our audience touch points beyond primarily professional marketing and advertising use cases and expanding into casual conversations.
"Giphy enables everyday users to express themselves in memorable ways with gif and sticker content, while also enabling brands to be a part of these casual conversations."
The UK's block of the acquisition was one of the country's first major moves against a Silicon Valley merger, on grounds of risk to competitors. Earlier this year, the CMA continued on this journey by blocking Microsoft's $68.7bn (£55bn) takeover of Activision Blizzard, following an investigation over the deal that would have seen Xbox-maker Microsoft acquire hit titles such as 'Call of Duty' and 'Candy Crush' in the “biggest takeover in tech history”.
Shutterstock said Giphy would add "minimal" revenue this year and it would launch efforts to increase revenue from 2024.
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