A good day for the stock market isn't necessary beneficial for social media king Meta Platforms (META 2.48%) too. This was proven on Tuesday, as the company's stock slumped by nearly 1% while the S&P 500 index happily bounced to a more than 1% gain. A regulatory defeat across the Atlantic Ocean was the key reason for the stock's decline.
Tuesday morning, U.K. antitrust regulator the Competition and Markets Agency (CMA) issued a final order mandating Meta Platforms to sell Giphy. The company said it will comply with the order.
Giphy is the British GIF search engine and storage site the social media giant bought in 2020 for $315 million. Shortly after that, however, the deal drew the attention of the CMA, which wasted little time bringing its case against the company.
Regarding its final order, the CMA reiterated the arguments it made throughout the case. The regulator wrote in a press release that "Meta's takeover of Giphy could allow Meta to limit other social media platforms' access to GIFs, making those sites less attractive to users and less competitive."
The CMA also argued that the buyout eliminated Giphy as a competitor in the U.K. display advertising market, to the detriment of British businesses which could potentially bring innovation to the space.
While owning Giphy certainly isn't make-or-break for Meta Platforms, the ruling is a defeat it doesn't need, coming as it does amid the company's struggles with user growth and other fundamentals. The company will surely survive and perhaps even thrive, but it will hopefully be more considered and careful about its future acquisitions.