The European Commission (EC) has confirmed that it is conducting an antitrust investigation into Facebook’s parent company, Meta Platforms Inc. (Meta), to how it connects its main social network and its classified advertising service on Marketplace.
that of the Commission Statement of Objections also points out “unfair trading terms” regarding the use of data collected from rival online advertisements.
Today’s announcement comes some 18 months after both the EC and the UK’s Competition and Markets Authority (CMA) announced separate but joint efforts to investigate whether Meta abused its dominant market position by using data from its social network to giving themselves an unfair advantage over rivals in the online classifieds space. This has been announced by the CMA back in August that it would continue its case against Meta, and the EC is now following suit.
Marketplace, which launched Meta in 2016, allows any Facebook user to buy and sell just about anything, from clothes and books to smartphones and furniture. But the EC now believes the company is likely violating European Union (EU) antitrust rules by “distorting competition in online classifieds markets” by tying its ads to the social network side of its business. This, it says, can infringe Article 102 of the Treaty on the Functioning of the European Union (TFEU) which contains provisions for companies that abuse a dominant market position.
“Through its social network Facebook, Meta reaches billions of monthly users and millions of active advertisers worldwide,” said Margrethe Vestager, European Commission Executive Vice-President for Competition Policy. a statement. “Our first concern is that Meta will link its dominant social network, Facebook, with its online classified ad services called Facebook Marketplace. This means that Facebook users have no choice but to access Facebook Marketplace.”
At the same time, the scope of the EC investigation also includes rival classified ads that advertise on Meta’s online properties such as Facebook and Instagram, calling the conditions it imposes on advertisers “unjustified” and “disproportionate.” Essentially, the EC is looking at how Meta can use advertising-related data from its competitors to take advantage of Marketplace.
“We are concerned that Meta has imposed unfair trading conditions, allowing it to use data from competing online advertisements,” Vestager added. “If confirmed, Meta’s practices would be illegal under our competition rules.”
Legal quarrels
Meta and its big tech brethren are facing a slew of legal and regulatory squabbles in Europe. Meta and Google are currently facing an investigation into alleged anti-competitive ad technology collusion, while in the UK, Meta’s oversight-based business model faces a legal challenge over how it processes data for ad targeting.
Today’s news signals the first time Meta has been formally accused of abusing a dominant market position in Europe. A notice of appeal essentially means that the EC informs the alleged offending company in writing of the EC’s specific objections, and allows the company to respond with any of their own objections or comments. After that, the EC has the power to instruct the company to stop doing what it is doing, while also imposing a fine of up to 10% of its global turnover. There is no specific legal deadline for completing such antitrust investigations.
businessroundups.org has reached out to Meta for comment and will update if and when we hear back.
