In a surprising turn of events, Meta Platforms has sold Giphy, a popular platform for animated images, to Shutterstock, an online stock-photo marketplace, for $53 million. This is a significant loss for Meta, which bought Giphy in 2020 for a whopping $315 million.
The UK’s Competition and Markets Authority (CMA) had ordered Meta to sell Giphy last year, due to concerns about potential anti-competitive effects. In economics, anti-competitive practices are actions that prevent or reduce competition in a market. These can include monopolies, where one company dominates, or collusion, where companies secretly agree to raise prices. The CMA was concerned that Meta’s ownership of Giphy could limit competition in the market for animated images, potentially leading to higher prices or less innovation.
The deal is set to close in June. This case is a real-world example of how regulatory bodies can2 influence the business decisions of large tech companies, and how these companies must navigate complex economic and legal landscapes. It also highlights the importance of competition in maintaining healthy markets, a key concept in economics.
THINK LIKE AN ECONOMIST!
Q1. What is a monopoly?
Q2. Explain one reason why government’s regulate anti-competitive behaviour.
Q3. Evaluate the impact that the government regulation might have on innovation and product development.
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