California-based Meta Platforms, Inc. (NASDAQ:FB) has appealed against an order by the U.K. Competition and Markets Authority (CMA) to sell animated images platform Giphy, which it acquired for $400 million in May 2020, Reuters said in a report.
The company said there is not enough evidence to support the finding that the deal could prove anti-competitive for the display advertising industry.
A Meta spokesperson said, “We are appealing the CMA’s Giphy decision and will seek a stay of the CMA’s order to divest…The decision to block the deal is wrong on the law and the facts, and the evidence does not support the CMA’s conclusions or remedy.”
The regulator announced the Giphy-sale order last month after it rejected the remedies offered by the Facebook owner. The CMA said the remedies would require continuous monitoring.
Giphy offers a library of looping videos, most of which come from Meta’s social media platforms WhatsApp, Facebook, and Instagram. Giphy’s GIFs are also used by people using Snapchat (SNAP), Twitter (TWTR), and TikTok. As a result, the CMA thinks Meta could force its rival platforms to provide more user data or limit their access.
In response, Meta said it would not limit its competitors’ access or gather more data from the users of Giphy’s GIFs as they do not feature any online tracking mechanisms like cookies or pixels.
Further, Meta’s decision to close Giphy’s advertising business, which was a potential source of competition, is also concerning for the competition regulator.
The company’s shares closed up 1.5% on Thursday at $335.24.
Overall, the stock has a Strong Buy consensus rating based on 29 Buys and 6 Holds. The average FB price target of $406.31 implies 21.2% upside potential. Shares have gained 25.4% over the past year.
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Meta’s performance.
According to the tool, compared to the previous year, Meta’s website traffic registered an 8.8% decrease in global visits in November. Moreover, website traffic has declined 4.2% year-to-date versus the same period last year.