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Meta Agrees to Sell Giphy to Shutterstock for a $347 Million Loss

Meta Agrees to Sell Giphy to Shutterstock for a $347 Million Loss

June 1, 2023

Meta's protracted legal battle over the acquisition of Giphy has finally concluded, as the company has agreed to sell Giphy to Shutterstock for $53 million. This price marks a significant decrease from the $400 million originally paid by Meta in 2020. Giphy argued that GIFs have lost popularity as a content form, with younger users dismissing them as outdated and cringeworthy.


To recap, Meta announced the acquisition of Giphy in 2020 with the intention of integrating Giphy's extensive GIF network into its various tools. However, the UK's Competition and Markets Authority (CMA) challenged the deal, expressing concerns about Meta gaining an unfair advantage in the digital ads market.


After a series of legal exchanges, the CMA ultimately ordered Meta to divest Giphy in October of last year. Giphy argued that it was no longer worth the $400 million offered by Meta and that no other company would consider acquiring it. The CMA believed that Meta could leverage Giphy's reach to strengthen its dominance in the ads space, prompting the ruling that will result in Meta incurring a loss of $347 million from the canceled deal.


Given Meta's overall financial challenges, obtaining any amount for the app is likely a relief. However, it is a disappointment for Mark Zuckerberg and his team, who originally envisioned a broader plan for GIF integration and usage. Nevertheless, Meta has shifted its focus to the metaverse and generative AI, and with ongoing staff cuts and prioritization efforts, GIFs were unlikely to remain a central element.


The argument that GIFs would help Meta dominate the ads market appeared tenuous from the start. Nonetheless, the CMA seemingly felt compelled to take a stand due to broader concerns about Meta's digital ads dominance, with the Giphy acquisition becoming the focal point.


For users, the practical impact is expected to be minimal. Giphy will still be supported through third-party integrations in various applications. As Giphy itself acknowledges, GIFs no longer hold the same cultural significance they once did when Meta acquired the platform in 2020.


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