Anyone working on mergers and acquisitions at Meta Platforms (formerly Facebook) might want to look for a new job
BY:
Salvatore Nicci
Technology Analyst / Reporter
PROJECT COUNSEL MEDIA
1 December 2021 (Paris, France) – Anyone working on mergers and acquisitions at Meta Platforms, formerly Facebook, might want to look for a new job. The British antitrust regulator’s decision to force Meta to divest Giphy, the tiny GIF search engine it acquired last year for $315 million, demonstrates that even small acquisitions are off limits to the tech giant. And while this was a decision in Britain, the Federal Trade Commission chair Lina Khan has signaled that tech companies’ habit of buying up small firms is also on her radar.
The Giphy decision is extraordinary on a couple of levels.
Start with the fact that the U.K. Competition and Markets Authority (CMA) is forcing the unwinding of a completed acquisition, which is unusual in itself. On top of that, the CMA has based its decision on a totally speculative analysis. Giphy was an American company that wasn’t generating any revenue in the U.K. when Meta bought it last year. And yet the CMA concluded that Giphy could have become a serious competitor to Meta in the U.K. display ad market if it had stayed independent.
Wow. Maybe CMA staffers ought to be in venture capital given their ability to see into the future.
The folks at Meta certainly did not see this coming. For the company, the deal was so small and apparently inconsequential that it was done without board approval and with internal approvals secured by email, according to the regulator’s report. You won’t even find a reference to Giphy in any Facebook securities filings, apparently because it was too small to need formal disclosure. (Notably, the oft-reported $400 million price tag turns out to be not what Meta actually paid). Meta staffers have surely spent far more time dealing with the aftermath of the acquisition than the deal itself.
And that may be the lesson here. Despite regulatory scrutiny, Meta has remained active in the small end of the M&A arena in recent months, particularly in the gaming and metaverse area, as Vox noted recently. Perhaps it’s time for Meta to pull back on M&A – either big or small.
