Unlock the Editor\u2019s Digest for free<\/p>\n
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/p>\n
Getty Images boss Craig Peters said the group would rethink the extent of its operations in the UK if the country\u2019s competition watchdog blocked its attempted takeover of US rival Shutterstock.<\/p>\n
Peters said the Competition and Markets Authority was overlooking how quickly AI is reshaping the image-generation market.<\/p>\n
Getty Images and Shutterstock are US-listed groups that sell visual content and together would create a company worth $3.7bn.<\/p>\n
This month, the CMA referred the deal, which was announced in January, to an in-depth phase 2 investigation, warning it could significantly reduce competition.<\/p>\n
Peter said this process would cost the groups more than $50mn, saying: \u201cIt\u2019s a really expensive appeal for\u2009.\u2009.\u2009.\u2009a very small portion of businesses in the UK.\u201d<\/p>\n
If the deal is blocked, he said, \u201cthere\u2019s parts of these businesses that probably don\u2019t continue to invest in the UK. There are pieces of this business that potentially exit [and] ultimately investments that aren\u2019t going to be made.\u201d<\/p>\n
Getty and Shutterstock face the threat of their professionally shot photos and videos being replaced by AI platforms that can generate images from text prompts. Digital image providers such as Adobe and Canva also offer alternatives.<\/p>\n
\u201cThis transaction is about taking a Shutterstock business that is in decline in terms of its licensing revenues and being impacted by AI, combining it with Getty and creating scale,\u201d said Peters. \u201cWe can\u2019t go buy a Google. We can\u2019t go buy an OpenAI. And so we need to compete in a different way.\u201d<\/p>\n
In its initial phase 1 decision, the CMA said its evidence indicated that the two companies were the main competitors for each other, alongside PA Media\/Alamy and Adobe Stock.\u00a0The evidence on Canva was more mixed, it said.\u00a0<\/p>\n
Peters said: \u201cWe fundamentally believe that this merger is not anti-competitive. We believe it is pro-growth and ultimately good for the market.\u201d<\/p>\n
The CMA said: \u201cDuring our initial investigation we heard widespread potential concerns about this deal \u2014 particularly around its impact on UK news outlets and advertisers\u2009.\u2009.\u2009.\u2009We also heard arguments around the evolving impact of AI in this market.
\u00a0
\u201cIt is right that we investigate further to understand whether businesses here in the UK could face higher subscription costs or get a worse service.\u201d<\/p>\n
Peters argued that the CMA is using too narrow a definition of the market in assessing competition and that the two groups were now up against US tech giants with vast budgets developing image generation tools.<\/p>\n
AI, he said, was causing huge changes in the market, \u201clarger than the internet, larger than digital photography, larger than social media\u201d.<\/p>\n
The CMA said it had not seen evidence that AI generated images \u201care either currently, or likely to be in the next few years, an alternative to stock content for a significant proportion of demand\u201d.\u00a0<\/p>\n