Meta unloads Giphy to Shutterstock at a loss of more than $260m

Meta has sold Giphy to Shutterstock for $53m, undertaking a loss of more than $260m, after its original purchase of the GIF maker was blocked by competition regulators in the UK.

Facebook’s parent company announced the sale of Giphy on May 23. Giphy, the world’s largest library for GIFs, was originally acquired by the social media giant in November 2021 for a sum of $315m.

Shutterstock confirmed that it had entered into a definitive agreement to acquire Giphy from Meta. It said that “Giphy’s vast library of GIFs and stickers draws more than 1.3 billion search queries on a daily basis and powers more than 15 billion daily media impressions. Giphy’s content serves as a critical ingredient in text- and message-based conversations on platforms such as Meta, other social media platforms such as TikTok, Twitter and Snapchat and team collaboration platforms such as Slack and Microsoft Teams, in addition to integrations with most mobile devices.”

You know that feeling when you find the perfect reaction GIF? That’s going to be us all the time now that @GIPHY is officially a part of Shutterstock. Also, is it pronounced GIF or JIF? Asking for a friend. 👀

Check out the deets here! https://t.co/z0TSecFx5W pic.twitter.com/EvQVqFilHp

— Shutterstock (@Shutterstock) May 23, 2023

The case against Giphy’s acquisition

Meta’s original acquisition was blocked by the UK’s Competition and Markets Authority (CMA) from the get go. The CMA made two rulings first in June 2022, followed by a ruling five months later on Meta’s appeal.

CMA in its ruling in October 2022 noted, “(Giphy’s purchase) may give rise to competition concerns in both the supply of display advertising in the UK, and in the supply of social media services worldwide (including in the UK). Facebook is required to sell Giphy.”

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.” He also observed, “The only way this can be addressed is by the sale of Giphy. This will promote innovation in digital advertising, and also ensure UK social media users continue to benefit from access to Giphy.”

Before the forced sale, Meta had filed that Giphy would struggle to survive as an independent business, and that there were few potential suitors for a forced sale. It said, “gifs “have fallen out of fashion as a content form, with younger users in particular describing gifs as ‘for boomers’ and ‘cringe’.”

Meta had said it was “disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter.” It had then begun to look for a buyer for Giphy. The CMA ruling was a first for a Big Tech company to be hit by anti-competition ruling that completely unwound a completed deal.

Meanwhile, Paul Hennessy, ceo of Shutterstock has sounded an optimistic note about the acquisition. He said, “This is an exciting next step in Shutterstock’s journey as an end-to-end creative platform,“.

He added, “Shutterstock is in the business of helping people and brands tell their stories. 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. We plan to leverage Shutterstock’s unique capabilities in content and metadata monetisation, generative AI, studio production and creative automation to enable the commercialisation of our GIF library as we roll this offering out to customers.”

Image credit: Getty Images