Meta, the parent company of Facebook, has sold Giphy, the popular animated GIF search engine, to Shutterstock for a significantly reduced price. The acquisition, which cost Meta $400 million three years ago, is being sold for just $53 million in net cash, resulting in a loss of over $250 million. Despite the loss, Meta has finally found a willing buyer for Giphy after being ordered by the U.K.’s antitrust authority to sell the platform due to reduced competition.
The sale of Giphy comes after months of legal processes and appeals initiated by Meta. The U.K.’s Competition and Markets Authority (CMA) initially ordered the sale in November 2021, citing concerns about decreased competition. Meta agreed to divest Giphy in October 2022 and began the formal process in January 2023. The conditions of the sale required Meta to find a buyer that would maintain Giphy as a whole entity and continue operating it as a GIF search engine, with the final decision resting with the CMA.
Shutterstock, a company known for its stock imagery, emerged as the buyer for Giphy. The acquisition aligns with Shutterstock’s strategic roadmap, as it aims to expand into different content types. With Meta’s back against the wall and the regulatory pressure to sell, Shutterstock was able to negotiate a lower price for the popular GIF platform.
Giphy’s value primarily lies in its ability to enhance user engagement on existing platforms rather than being a strong standalone business. Meta’s predicament in the sale was largely attributed to its decision to complete the merger with Giphy before obtaining clearance from the CMA. This highlighted the risk of completing a merger without regulatory approval, as authorities can subsequently investigate and potentially require divestment.
Shutterstock sees the acquisition of Giphy as an opportunity to extend its audience reach, particularly targeting consumers. The company plans to integrate GIFs and stickers into its content library, enabling advertisers, brands, and everyday users to engage in memorable conversations. The deal also strengthens Shutterstock’s generative AI and metadata strategy, allowing for monetization of its GIF library and the rollout of this offering to customers.
While Meta incurred a substantial loss in the sale of Giphy, the transaction signifies an important move in compliance with antitrust regulations. The U.K. appears to be adopting a stricter approach to big tech acquisitions, aiming to rectify previous instances where such deals were approved without thorough scrutiny. For Shutterstock, acquiring Giphy at a discounted price presents an opportunity to expand its content offerings and enhance its position in the market.
