Facebook’s owner Meta has been ordered to sell the gif-creation website, Giphy, by the Competition and Markets Authority (CMA). In its ruling, the regulator said it found “the completed acquisition by Facebook, Inc (now Meta Platforms, Inc) of Giphy, Inc. may give rise to competition concerns in both the supply of display advertising in the UK, and in the supply of social media services worldwide (including in the UK).”

Facebook bought Giphy two years ago for $400m (£353m) but was told by the CMA last November that it would have to sell the company in order to resolve competition concerns. Meta appealed against the decision, leading the CMA to carry out an expedited review of its original findings, including new submissions from both Meta and Giphy. After completing this review, it has stood by its original decision.

The regulator was concerned that Meta could use its ownership of Giphy to either stop supplying gifs to other social media companies, or to demand more user data from those companies.

In a summary of its assessment, the CMA said: “We have identified adverse effects relating to, among other things, choice, quality and innovation. In a dynamic and growing sector, these adverse effects are likely to be substantial and to increase over time, absent effective action. We therefore consider that the divestiture of Giphy is necessary to achieve the aim of remedying the SLCs [substantial lessening of competition] we have found.”

In a statement, Meta confirmed that it will abide by the ruling, saying: “We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter. We will work closely with the CMA on divesting Giphy.”