British regulator breached international law by blocking Giphy buyout, Meta tells judges
CMA's decision to prohibit Meta's purchase of Giphy is a 'global concern,' it claims
Facebook-owner Meta told the Competition Appeal Tribunal (CAT) judges on Tuesday that UK's Competition and Markets Authority (CMA) violated international law when it blocked the company's purchase of the popular gif-sharing service Giphy.
"The legal points we're raising are that the CMA misdirected itself on international law and exercised its jurisdiction in breach of international law," Meta's lawyer said in the CAT hearing this week, according to The Register.
The counsel went on to say that "the adverse impact on competition in the UK was at best speculative," and that the CMA's decision to prohibit Facebook's purchase of Giphy was a "global concern".
Giphy is a popular website that lets users make and share animated images, or GIFs. It has a large library of short video animations, which are highly popular among users of Facebook's apps. Giphy also offers animations to rivals like Snapchat, Twitter and TikTok.
In May 2020, Facebook announced that it intended to integrate Giphy with its photo-sharing app, Instagram. It said nearly half of Giphy's traffic comes from various Facebook apps, including Instagram and WhatsApp, and that the acquisition would not impact Giphy's existing deals with other partners.
Following the announcement, the CMA opened an antitrust probe into the takeover. In its preliminary report, the watchdog said it had a number of competition concerns.
'Millions of posts every day on social media sites now include a GIF. Any reduction in the choice or quality of these GIFs could significantly affect how people use these sites and whether or not they switch to a different platform, such as Facebook.'
In November, the regulator ordered Meta to sell Giphy, after its investigation suggested that the acquisition could limit competition between social media platforms, thereby harming social media users and advertisers in the UK.
The regulator believes Facebook could use the acquisition to increase its already significant market power, by limiting or completely denying other platforms' access to Giphy GIFs.
Last month, Meta launched a formal legal challenge against the CMA's directive to sell the Giphy.
On Tuesday, Mr Justice Marcus Smith heard the accusation from Meta at a hearing in the legal tussle between the two parties.
Responding to allegations that CMA exercised its jurisdiction in breach of international law, Tristan Jones for the British regulator told the judge that when such submissions are made, the tribunal must carefully review them to see if they are relevant and admissible to the arguments being presented.
The CMA has punished Facebook many times for failing to comply with British authorities in the Giphy case.
In November, the regulator fined Meta £50.5 million for a 'major breach' of its order that the Meta remains separate from Giphy during the investigation.
Most recently, in January, Meta was fined £1.5 million (0.005 per cent of its annual earnings) - which many saw as a token fine - for failing to tell the CMA that three senior key employees had resigned and their responsibilities had been reallocated.
Notably, an antitrust court in Austria earlier this month approved Meta's purchase of Giphy, with certain conditions, in a boost for the social media behemoth.
Those conditions include granting rivals access to Giphy's image library for five years and assisting in the establishment of an alternative supplier of a GIF library within seven years.