Getty Images said on Tuesday it had scrapped its planned merger with Shutterstock as Britain's competition regulator required the sale of Shutterstock's editorial business as a condition of approving the deal. Two of the largest companies in the licensed visual content industry announced the deal in January to create a $3.7 billion stock-image giant for the age of artificial intelligence.
The merger's collapse comes as both companies face increasing competition from artificial intelligence image generators that offer a cheaper and more convenient way to create visuals.
"We don't think the advantages of scale can do more than temporarily alleviate competitive pressure, but without the scale advantages brought by the merger, the prospects for both companies will be more difficult," said Luke Stillman, managing director of trend consulting firm Madison and Wall.
Getty shares rose about 1.1% to $0.87 in after-hours trading, while Shutterstock shares plunged about 29% to $9.95.
The U.K. Competition and Markets Authority (CMA) conditionally approved the merger in May, requiring Shutterstock to sell its editorial unit to address concerns over the supply of U.K. news content.
The regulator's independent panel determined that not selling the editorial business would reduce UK media choice and could ultimately lead to consumers paying higher prices, as Shutterstock is one of Getty's few real competitors.
Getty Images said in a regulatory filing on Tuesday that it would formally terminate its cooperation agreement with Shutterstock after extending the deadline to July 6.
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