Paul Sandle

LONDON (Reuters – Britain has blocked Meta Platform Inc, the owner of Facebook’s acquisition Giphy. It signaled a new commitment to examine digital deals.

Meta appealed to the Competition and Markets Authority’s decision on Thursday, which stated that Giphy must be sold and the 2020 deal must remain unwound.

It was the first instance that the regulator had stopped a company from acquiring a tech giant.

The CMA’s Chief Executive Andrea Coscelli has increased its oversight of “big tech” and, in particular, Facebook and Google (NASDAQ) which are the dominant digital advertisers.

Coscelli created a unit for digital markets and wants new legislation to support it.

Competition lawyer Peter Broadhurst, partner at Crowell & Moring, said Coscelli thought there had been historic under-enforcement in digital markets.

He said that merger control was a fast-win solution that the CMA could implement.

He stated that he believed they were happy to push the boundaries, even if they have to be slapped by court. They do this to determine where they are.

Facebook pointed out that Giphy does not have any presence in Britain. It also has no employees or offices in Britain. And it did not launch its fledgling advertising company in Britain.

CMA stressed that the process it uses is independent and said the agreement was within its purview. The CMA noted that UK users search for 1 Billion GIFs per month on Giphy and 73% spent their time on Meta’s Facebook and Instagram.

The CMA expressed concern about Giphy’s entry into the display advertising industry, even though the company had never done so in Britain. CMA indicated that they wanted to protect potential rivals and competitors given Meta’s dominant social network.

Danni Hewson from AJ Bell Financial said that CMA acted in the belief that Giphy and Facebook could one day compete. Hewson stated that tech bosses would seek out to determine how strong the regulators are, and whether this decision will be followed by other regulators.

Broadhurst claimed that the CMA went further than ever in supporting this argument.

He said that this would create a lot uncertainty for businesses trying to make deals in areas where they don’t compete but could in the future, especially where one party may be a big player in their own markets.