The United Kingdom's antitrust watchdog has blocked Facebook's acquisition of Giphy and ordered the social network to sell off the GIF-sharing platform, saying the deal hurts social media users and advertisers by stifling competition for animated images.
The Competition and Markets Authority said Tuesday that the deal would let Facebook, which has been renamed Meta, "increase its already significant market power" by denying or limiting other platforms' access to Giphy GIFs and driving traffic to Facebook-owned sites.
It's reportedly the first time the watchdog has sought to unwind a tech deal.
After consulting with other businesses and groups and assessing alternative solutions proposed by Facebook, the watchdog said it "concluded that its competition concerns can only be addressed by Facebook selling Giphy in its entirety to an approved buyer."
"By requiring Facebook to sell Giphy, we are protecting millions of social media users and promoting competition and innovation in digital advertising," said Stuart McIntosh, chair of the group that carried out the investigation.
Giphy's library of short looping videos, or GIFs, are a popular tool for internet users sending messages or posting on social media.
The two sides have waged a bitter battle over the deal, reportedly worth $400 million.
The Competition and Markets Authority said in a provisional decision in August that Facebook should be forced to sell Giphy. The social giant responded with a strongly worded letter, saying the provisional decision contained "fundamental errors."
Facebook didn't immediately respond to a request for comment on the decision.