Content suggestion platforms Taboola and Outbrain cancel merger

Plans for a merger between content suggestion platforms Taboola and Outbrain have been called off.

The deal was facing an investigation by the UK’s Competition and Markets Authority, which said it could result in worse terms for publishers who face getting a smaller share of advertising revenue.

The US-based platforms, which are the only significant players of their type in the UK, had maintained that by forming a bigger company to have scale that could better rival Google and Facebook they would be able to attract more budget to the news ecosystem.

Instead, as the deal is off, publishers will maintain choice in the market but lose scale.

An anonymous source close to the merger told Tech Crunch the deal had been terminated following “changing conditions in the market” due to Covid-19, which hit advertising spend hard.

A well-placed source, who asked to remain anonymous, told Press Gazette Taboola had been unable to secure the financing required as part of the deal, which would have given the combined companies a worth of $2bn.

Taboola was intended to pay Outbrain investors $250m in cash and shares representing 30% of the combined company

The source claimed Taboola had also tried to renegotiate the terms of its deals with publishers several months ago, which resulted in some major players like News UK and Fox News leaving their platform. News UK subsequently moved to Outbrain instead.

Taboola and Outbrain are native advertising platforms that display boxes of recommended content within news publishers’ pages. Publishers receive a share of the revenue for each clickthrough a user makes.

The companies have been operating independently despite announcing in October that “today, Taboola and Outbrain are merging into one”.

In June, Taboola chief executive and founder Adam Singolda wrote: “I can tell you, we’re even more excited about the potential to become one with Outbrain, as in times like these, we think we’d be an even stronger partner together for our community, supporting journalism, the open web and advertisers of all sizes.”

The US Department of Justice gave its green light to the plan in July.

Taboola has not responded to a request for comment.