After Facebook parent company Meta paid $315 million for Giphy in 2020, a bit of creative accounting allowed the deal to fly under the radar of US antitrust regulators. However, the British government stepped in, canceling a deal between two US-based companies, a rare occurrence. The UK government’s antitrust authority, the Competition and Markets Authority (CMA), said the deal would stifle competition in the social media landscape and the digital advertising industry, ultimately harming the British public. Meta has stated that it will appeal the decision, but the UK appears to be intent on unraveling the deal.

Despite a flurry of acquisitions by major tech firms, deals like Meta’s acquisition of Giphy escaped serious antitrust scrutiny until recently. The British government’s decision to block the deal indicates that US technology companies will face challenges both at home and abroad when attempting to acquire companies in the coming years. If the UK cancels the Giphy deal, it heralds a tougher regulatory environment for Big Tech, in which the largest companies will be unable to rely on the same acquisition strategies that once fueled their growth.

In their heyday, US government regulators routinely blocked large-company mergers. The Sherman Antitrust Act, passed by the United States Congress in 1890, ushered in decades of so-called trust-busting and Supreme Court cases that affirmed the government’s authority to break up illegal monopolies in the name of promoting competition.

However, while merger filings nearly doubled from about 1,100 to 2,000 between 2010 and 2018, US federal enforcement actions remained stable at around 40 per year, according to research by the Washington Center for Equitable Growth. As Silicon Valley’s tech titans gobbled up an ever-increasing share of the economy, buying up hundreds of firms along the way, regulators gave them a pass.

However, there has been a reckoning with Meta and the largest global technology firms, particularly in terms of size, market dominance, and societal influence. Renewed scrutiny has been cast on Facebook’s acquisitions of Instagram and WhatsApp, in particular. The US Federal Trade Commission (FTC) and 48 state attorneys general have filed a lawsuit against Facebook for allegedly acquiring companies in order to stifle competition in the social media market.

The US House antitrust subcommittee issued a 451-page report accusing Alphabet, Amazon, Apple, and Meta of abusing their dominant market positions. Apple has been chastised around the world for its App Store policies, Amazon has been chastised for competing against its own sellers, and Alphabet has been chastised for mobile operating system policies that allegedly gave its search engines and ad networks a market advantage.

The appointment of prominent tech critic Lina Khan to chair the FTC, signaling Washington’s desire to take on Big Tech, may have been a watershed moment for the US. The FTC released a study in September 2021, three months into Khan’s tenure, that, according to Khan, “captures the extent to which [Alphabet, Amazon, Apple, and Meta] have devoted tremendous resources to acquiring start-ups, patent portfolios, and entire teams of technologists—and how they were able to do so largely outside of [the FTC’s] purview.” In 85 percent of the 600-plus cases examined, the companies’ acquisitions fell below the financial threshold that would require them to report the transaction to the FTC. In a few cases, the buyer assumed debt or other liabilities in order to keep the transaction’s value below the reporting threshold.

This was the case with Giphy. The company, which operates a database and search engine for animated GIFs, reportedly paid a dividend to investors ahead of its agreement with Meta to reduce the value of its assets, allowing it to avoid the federal threshold. In September, presumably in response to the Giphy scenario, Khan’s FTC rescinded its 18-year-old guidance that allowed companies to avoid reporting by paying dividends. In the future, the Commission promised to take a “more holistic” approach to merger review. However, by that time, British regulators had already released their preliminary findings on the Meta-Giphy deal, indicating that they were likely to order its cancellation.

Global anti-trust regulators are also flexing their muscles far from the headquarters of companies. Benjamin Sirota, a former Justice Department antitrust prosecutor and an attorney at the law firm Kobre & Kim, said the CMA showed it has a “low threshold for investigating and ultimately trying to block deals that have some sliver of a connection to the UK.”