Regarding the UK Competition and Markets Authority’s Decision to Block Meta’s Acquisition of Giphy, the Center for American Entrepreneurship and Small Business & Entrepreneurship Council Warn of Broader Consequences
December 23, 2021
December 23, 2021
WASHINGTON, D.C. – On November 30th, the United Kingdom’s Competition and Market Authority (CMA) announced it had directed Facebook parent company Meta to sell Giphy in the UK, a platform for sharing animated images, asserting that the acquisition could reduce competition among social media platforms. Meta agreed to acquire New York-based Giphy in May of 2020 for $400 million after Giphy approached Meta. Facebook and Giphy are not direct competitors.
John R. Dearie, president of the Center for American Entrepreneurship, and Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council, today issued the following statements regarding the UK CMA’s decision to block Meta’s acquisition of Giphy:
“In CAE’s view, the CMA’s action raises significant concerns for the American entrepreneurial ecosystem,” Mr. Dearie said. “Acquisition is an altogether legitimate and important avenue of ‘exit’ for entrepreneurs and their investors. As CAE board member and three-time entrepreneur Bettina Hein stated in testimony before the Competition Policy, Antitrust, and Consumer Rights Subcommittee of the Senate Judiciary Committee on December 15th:
‘Acquisition is by far the most likely avenue for entrepreneurs and their employees to realize the value of what they have created through years of hard work and sacrifice. In a typical year, ten times as many startups are acquired as go public. According to a recent report by Silicon Valley Bank, nearly 60 percent of startups expect to be acquired. Importantly, acquisitions also enable startup investors to reclaim their invested capital, realize any gains, and recycle their capital into the next generation of startups, fueling the ongoing process of innovation-led economic growth and job creation.’
“Noting the unprecedented nature of the CMA’s intervention,” Mr. Dearie continued, “CAE respectfully urges that antitrust agencies in the United States and abroad keep two fundamental realties in mind as they do their important work. First, market economies function best, most efficiently, and fairly when the rules of competition are clear, transparent, predictable, and consistent. Second, antitrust policy has real and potentially far-reaching implications for the entrepreneurial ecosystem given the critical importance of acquisition as a mechanism for realizing value and recycling capital into future generations of startups that drive innovation, economic growth, and job creation.”
“This foreign action to block acquisition activity of two U.S.-based companies is unprecedented, and startling,” Ms. Kerrigan said. “America’s dynamic and productive startup ecosystem is the jewel of the global marketplace, and the U.K.’s bold overreach directly undermines our innovative and investment environment. This is a serious matter for the Biden Administration and Congress to address, as the U.K. Competition and Market Authority’s action could snowball and cause disruption for a broad range of U.S. sectors, as well as the health of global entrepreneurship and functioning of capital markets.”
About the Center for American Entrepreneurship
The Center for American Entrepreneurship (CAE) is a nonpartisan research, policy, and advocacy organization whose mission is to engage and educate policymakers in Washington and across the nation regarding the critical importance of entrepreneurs and startups to innovation, economic growth, and job creation – and to pursue a comprehensive policy agenda intended to significantly enhance policy circumstances for new business formation, survival, and growth.
For more information, visit www.startupsUSA.org
Follow CAE on Twitter: @startupsUSAorg
About the Small Business & Entrepreneurship Council
The Small Business and Entrepreneurship Council (SBE Council) is an advocacy, research, and education organization dedicated to protecting small business and promoting entrepreneurship. Its network of supporters, including entrepreneurs and small business owners, state and local business organizations, corporate partners and associations work to strengthen the environment for robust entrepreneurship, investment, innovation and small business growth. Since its founding in 1994, SBE Council has worked both domestically and across the world to further its mission, and is viewed as one of the most powerful and effective organizations dedicated to protecting small business, and promoting entrepreneurship.
For more information, visit www://sbecouncil.org/
Follow SBE Council on Twitter: @SBECouncil