Meta has been compelled to divest from Giphy based on competition concerns. The company, then still called Facebook, acquired the GIF sharing platform for $315 million in 2020.
Giphy monetizes its services by enabling companies to create branded GIF images, which are then seamlessly integrated into platforms such as WhatsApp, Instagram, and Messenger.
Initially, the acquisition seemed like a logical move for Meta. Giphy’s widespread popularity and its potential to synergize with the company’s existing services made it an attractive prospect. However, it didn’t take long for concerns regarding competition to surface.
The UK’s antitrust watchdog, the Competition and Markets Authority, launched the inquiry
This investigation aimed to determine whether the acquisition created a “relevant merger situation” under the Enterprise Act 2002. If so, it would determine whether it resulted in a substantial reduction of competition within any market in the UK.
In August of last year, the Competition and Markets Authority concluded that the acquisition indeed diminished competition. Consequently, in November, the regulator issued a directive to Meta, instructing the company to reverse the acquisition.
Enter Shutterstock, renowned for its provision of stock photography, footage, and music. The acquisition of Giphy by Shutterstock, which Reuters reports was sealed for a mere $53 million in cash, represents a truly lucrative deal for the company. It managed to secure Giphy at a whopping $262 million discount compared to Meta’s original purchase.
What Shutterstock had to say about it
Paul Hennessy, the Chief Executive of Shutterstock, expressed his enthusiasm about the acquisition. He stated: “Through the GIPHY acquisition, we are extending our audience touch points beyond primarily professional marketing and advertising use cases and expanding into casual conversations.”
Hennessy further elaborated on the company’s plans to leverage Shutterstock’s unique expertise in content and metadata monetization, generative AI, studio production, and creative automation. This strategic move aims to unlock the commercial potential of Shutterstock’s vast GIF library as it is gradually rolled out to customers.
The acquisition is expected to be finalized in June, with Shutterstock anticipating “minimal revenue” from the acquisition in 2023.
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