Facebook’s parent company has sold the biggest name in GIFs at a loss. 

Meta has sold Giphy, the animated graphics company, at a significant loss after the UK competition regulator ordered Meta to divest the startup over competition concerns. 

Shutterstock, the well-known stock image service, has stepped in to acquire Giphy, offering a cash payment of US$53 million (AU$80 million). 

Giphy boasts an impressive user base of 1.7 billion daily users and partners with major platforms such as Facebook, Instagram, Whatsapp, TikTok, and Twitter.

Shutterstock's CEO, Paul Hennessy, says the purchase will allow Shutterstock to expand its audience reach beyond the confines of professional marketing and advertising use cases, venturing into more casual conversations.

Shutterstock has reportedly signed an agreement to grant Meta continued access to Giphy's content across its platforms.
The transaction is expected to close next month, potentially leaving Meta with a substantial financial loss.

Meta initially acquired Giphy in 2020 in a deal valued at around US$400 million (AU$605 million). However, the UK's Competition and Markets Authority (CMA) launched an antitrust investigation, expressing concerns about the deal's impact on competition in the UK's GIF market. 

After an unsuccessful appeal by Meta, the UK watchdog concluded that selling Giphy to an approved buyer was the only way to avoid the significant negative impact on competition. The UK watchdog said Meta's purchase of Giphy would have harmed social media users and advertisers by limiting competition for animated images. Furthermore, it found that the deal would have increased traffic to Meta-owned sites while restricting access to Giphy GIFs for other online platforms.

The CMA's decision to block Meta's acquisition of Giphy represents the first instance of the UK watchdog unwinding a tech deal, setting a precedent for future regulations in the industry. 

Just last month, the CMA also prevented Microsoft's US$69 billion (US$104 billion) acquisition of video game maker Activision Blizzard, citing similar concerns regarding stifled competition in the cloud gaming market.