PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

U.S. Entrepreneur Group Deeply Troubled by UK Regulatory Action

By at 18 October, 2022, 3:17 pm

“The U.K.’s CMA has taken direct aim at America’s startup ecosystem through its brash overreach.” 

For Immediate Release

Washington, D.C. – Today, Meta announced that it will sell GIF-sharing platform Giphy in response to a final decision reached by the United Kingdom’s Competition and Market Authority (CMA), which asserted the acquisition could reduce competition among social media platforms.  Meta acquired New York-based Giphy in May of 2020 for $315 million after Giphy approached Meta. (Facebook and Giphy are not direct competitors.)  The Small Business & Entrepreneurship Council (SBE Council) expressed deep concern about this troubling action that forces a U.S.-based company to sell part of its business (in this case an acquisition), as it will have a chilling effect on America’s startup ecosystem and undermine the ability of innovative startups and businesses to connect with the resources and capital required to scale and compete in the global marketplace.

SBE Council chief economist Raymond J. Keating said:

“This action taken by CMA regulators makes no sense. It is based on a combination of wild, baseless speculation, a gross misunderstanding of how dynamic and competitive markets work, and politics trumping sound economics. And perhaps worst of all, a foreign regulator is creating uncertainty for U.S. entrepreneurs and investors. Acquisition is a key ‘exit’ for many entrepreneurs and investors, with resources often then being re-invested in other entrepreneurial firms. This is a blow against American entrepreneurship.”

SBE Council president & CEO Karen Kerrigan added:

“The CMA’s action to block acquisition activity of two U.S.-based companies is unprecedented and startling.  America’s dynamic and productive startup ecosystem is a model to be admired and replicated, not weakened and destabilized. The U.K.’s CMA has taken direct aim at America’s startup ecosystem through its brash overreach. This is a serious matter that the Biden Administration and Congress must address, as the CMA’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.”

According to a recent report by Silicon Valley Bank, nearly 60 percent of U.S. startups expect to be acquired. Learn more about the importance of M&A to startups and small businesses here, and what’s at stake if this critical and efficient economic activity is disrupted through rash policy or regulatory action.

CONTACT:

Karen Kerrigan, kkerrigan@sbecouncil.org

Raymond Keating, rkeating@sbecouncil.org

SBE Council is nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 28 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit www.sbecouncil.org for additional information. Twitter: @SBECouncil

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