META stock is trading at $132.44 as of 02:51 PM EDT.

The U.K.’s Competition and Markets Authority ordered Meta Platforms (NASDAQ:META) to sell animated search engine Giphy on the basis that the agreement might restrict the access of other social media networks to GIFs, which would be detrimental to social media users in the U.K.

A spokeswoman for Meta (NASDAQ:META) told The Verge that the company was “despite being” disappointed by the CMA’s decision, the party would nonetheless accept it as the “last word on the matter.” On divesting Giphy, we will cooperate closely with the CMA.

The CMA stated on Tuesday that alternative social networks might become “less attractive to users and less competitive” if Meta Platforms (META) restrict users’ access to GIFs. The deal, according to the agency, stifled innovation by eliminating Giphy as a possible rival in the U.K. video ad market. The CMA said that about half of the £7 billion UK display advertising market is controlled by Meta (NASDAQ:META).

The CMA stated in a statement that it had come to the conclusion that selling Giphy to an approved bidder in its entirety was the only way to prevent the deal’s severe impact on competition. The Facebook division of Meta Platforms (NASDAQ:META) couldn’t buy Giphy in July because the Competition Appeals Tribunal of Great Britain didn’t agree with the conclusions of the CMA.

The Competition Appeals Tribunal said that the CMA “failed to consult adequately” and “wrongly took things out of its decision.” The CMA announced that it would review its decision.

Since then, an independent CMA panel has found that 73% of social media time in the U.K. is spent on websites owned by Meta Platforms (NASDAQ:META). This means that denying or limiting access to Giphy GIFs could make people use these platforms more often.

There were also worries that using Giphy’s GIFs would require customers like ByteDance’s (BDNCE) TikTok, Twitter (NYSE:TWTR), and Snap’s (NYSE:SNAP) Snapchat to ask U.K. users for more information.

Meta Platforms (NASDAQ:META) paid about $400 million for Giphy in 2020. Giphy is a search engine for animated GIFs. Investment company Bernstein selected Meta Platforms (META) as its top pick last week.

Meta stock outlook

As of 11:41 a.m. ET, shares of Meta Platforms (NASDAQ:META) are up 4.9% today. Even though a Wall Street Journal article said that Horizon Worlds, Meta’s platform for the metaverse, is not growing as fast as the company had hoped, progress was made.

With the company trading at a low valuation ahead of third-quarter earnings results, investors ignored the bad news. After declining 60% year to date, the share price of Meta does appear to be a little oversold. More on the article published by the Motley Fool. 

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