The European Commission announced on Monday that social media giant Meta has breached EU antitrust rules by ‘’distorting competition in the markets for online classified ads’’.
In a statement on its preliminary findings of an investigation opened in June 2021, the Commission said that Meta links its popular social network Facebook with its online classified ads service Facebook Marketplace, automatically giving users access to the service without asking if they want, and gaining ‘’a substantial distribution advantage’’ over its competitors.
The Commission also added that the company ‘’unilaterally imposes unfair trading conditions on competing online classified ads services which advertise on Facebook or Instagram’’. Its terms and conditions, which enable it to use data of these advertisers in favor of Facebook Marketplace, are ‘’unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta’s platforms’’. While hurting rival businesses, these conditions merely benefit Facebook Marketplace, it said.
If confirmed, Meta could face a fine of up to 10% of its annual worldwide turnover, which would be around $11.8 billion given its current figures.
‘’With its Facebook social network, Meta reaches globally billions of monthly users and millions active advertisers,’’ said Margrethe Vestager, Executive VP in charge of competition policy. ‘’Our preliminary concern is that Meta ties its dominant social network Facebook to its online classified ad services called Facebook Marketplace. This means Facebook users have no choice but to have access to Facebook Marketplace. Furthermore, we are concerned that Meta imposed unfair trading conditions, allowing it to use of data on competing online classified ad services. If confirmed, Meta’s practices would be illegal under our competition rules.’’
Issuing the Statement of Objections to the company does not prejudge the outcome of the investigation, the Commission noted.
Timothy Lamb, Head of EMEA Competition & Regulatory at Meta, said: ‘’The claims made by the European Commission are without foundation. We will continue to work with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive.”
Earlier this month, The EU’s European Data Protection Board also ruled that Meta can’t require users to agree to personalized ads.