OGH: Giphy Takeover by Facebook Permitted

Jul 22, 2022 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, OGH), as the highest cartel court, has confirmed non-prohibition of the takeover of the GIF platform Giphy by Meta Inc (Facebook), but subject to certain requirements.

Facebook parent Meta Inc bought shares in Giphy in 2020, thereby acquiring a controlling influence over the company. Giphy is a digital library and search engine for GIFs and stickers. While Giphy distributes its GIFs on its own website and app, the overwhelming majority (95%) of Giphy's GIFs are distributed via programming interfaces that allow third parties to access Giphy's library. For example, smartphone keyboard apps can access GIFs by Giphy. Giphy also provides the possibility of GIF advertising. Companies can, for instance, pay for their own GIFs to appear in the pre-selection of the most popular GIFs on a certain number of days. GIFs are used on many platforms as they offer users enhanced possibilities of expression as well as encourage user interaction.

As a result of the takeover of Giphy, the Austrian federal competition authority, Bundeswettbewerbsbehörde, BWB, and the federal cartel advocate, Bundeskartellanwalt, applied for the merger to be examined under Section 11 ff. of the Austrian Cartel Act (Kartellgesetz, KartG).

The competent Cartel Court did not prohibit the merger, but subjected it to specific conditions.

The Austrian federal competition authority and the federal cartel advocate appealed against this decision before the Supreme Court. The latter, however, upheld the decision of the Cartel Court, as follows:

The findings of the court of first instance are unobjectionable. No definable market for the provision of GIFs or GIF libraries for third parties as such can be established. In this respect, neither Meta nor Giphy have a dominant position on that market. Although Meta holds such a position on the worldwide market for social media, Giphy had not been active on this market until the takeover. According to the Cartel Court, however, a strengthening of Meta's dominant position would result from the foreclosure of input (GIF libraries). Therefore, the following requirements were imposed: Granting non-discriminatory access to Meta's (now) GIF library to existing and future affiliates as well as establishing measures to help develop an additional GIF provider. The Supreme Court considered these measures to be sufficient and thus confirmed the non-conditional prohibition.

OGH 16 Ok 4/22g (23 June 2022)