The Competition and Markets Authority found that Meta’s takeover of Giphy could allow the firm to limit other social media platforms’ access to GIFs, making those sites less attractive to users and less competitive.
Stuart McIntosh, Chair of the independent inquiry group carrying out the remittal investigation, said: “This deal would significantly reduce competition in two markets.
“It has already resulted in the removal of a potential challenger in the UK display ad market, while also giving Meta the ability to further increase its substantial market power in social media.”
In a statement Meta said it would not be contesting the decision but disagreed with the CMA’s ruling as Giphy did not have an advertising business and the regulator blocked the transaction on the basis that the firm might develop one in the future.
The spokesperson said: “We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter.
“We will continue to evaluate opportunities - including through acquisition - to bring innovation and choice to more people in the UK and around the world.”
Meta said it would work with the CMA to find a way to sell the business.
Founded in New York in 2013, Giphy is a search engine that allows social media users to find looping videos that they can repost.
The firm was acquired by Facebook – since renamed to Meta – in May 2020 in a $315 million deal. The CMA issued an enforcement notice preventing integration of the two companies in June 2020.