The Markets and Competition Authority said on Tuesday the deal could harm UK social media users and advertisers.
Meta did not immediately respond to a request for comment from CNBC, but the company reportedly told Reuters it disagreed with the decision.
The regulator concluded that Meta’s acquisition of Giphy would reduce competition between social media platforms. He added that the deal had already eliminated Giphy as a potential challenger in the display advertising market.
A panel found that Facebook would be able to increase its already significant market power over other social media platforms by denying or limiting other platforms’ access to Giphy gifs.
This in turn would send more traffic to Facebook-owned sites – Facebook, WhatsApp and Instagram – which already account for 73% of user time spent on social media in the UK, the panel concluded.
“We do not agree with this decision,” said a spokesperson for Meta, according to Reuters. “We are reviewing the decision and looking at all options, including the appeal. “
In August, the CMA said it had tentatively concluded that Meta’s purchase of Giphy would hurt competition between social media platforms and eliminate a potential challenger in the display advertising market.
At the time, the CMA said it could demand the company to unwind the deal, which is said to be worth $ 400 million, and sell Giphy if its competition concerns are ultimately confirmed.
When the deal was announced, Facebook said it wanted to integrate Giphy more into the Instagram app “so people can find the right way to express themselves.”
The CMA fined Facebook £ 50.5million ($ 67.4million) in October for failing to provide regular updates to show it is complying with an order. He said Facebook was “severely limiting the scope of these updates” despite repeated warnings.