Facebook Marketplace Is Killing Competition? European Union Warns Facebook Over Market Violation

Rohit Kulkarni

Rohit Kulkarni

Dec 25, 2022

The Facebook parent company Meta (META.O) has recently been warned by the European Commission over the breach of EU antitrust laws by distorting competition in markets for online classified advertising and abusing its dominant position.

Facebook Marketplace Is Killing Competition? European Union Warns Facebook Over Market Violation

In a preliminary view, the commission says that it would further investigate and just in case, there is sufficient evidence of an infringement of European Union rules, then the company can be imposed a fine of up to 10% of its annual global turnover.

Concern Raised by Commission Over Abusing Dominant Position

In a statement, the European Union’s antitrust chief Margrethe Vestager said that she is concerned that the company ties its dominant social network Facebook to its online classified ad services, which is called Facebook Marketplace, leaving users no choice but to have access to Facebook Marketplace.

Meta denied its business practices were anti-competitive.

Dismissing these claims, Meta spokesperson Tim Lamb said in a statement that “The claims made by the European Commission are without foundation”. She added that “We will continue to work with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive”.

As per the commission, in addition to tying its online classified ads service to its social network, Meta was also abusing its dominant position by unilaterally imposing unfair trading conditions on competing online classified ads services which advertise on Facebook or Instagram.

As per the commission, the terms and conditions that are used by Meta are unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta’s platforms. These are the terms and conditions which allow the company to use ads-related data derived from competitors for the benefit of Facebook Marketplace.

Launched in 2016, the Facebook Marketplace is active in 70 countries to buy and sell items.

Sources familiar with the matter last month told Reuters the EU antitrust regulators were drawing up charges against Meta over its use of customer data and the tying of its classified advertisements service to its social network.

The Commission said on Monday that it was concerned that Meta is imposing “unfair trading conditions” on competitors of its own classified ads service, Facebook Marketplace, that want to advertise on its social networks Facebook or Instagram.

The EU competition enforcer launched an investigation into Facebook in June last year, focusing on whether the social network unfairly uses advertisers’ data to compete with them in the online classified ads sector.

Initial Concerns Not Confirmed in Careful Assessment: Commission

In a separate statement on Monday, the Commission also said it had closed its antitrust investigation into Google and Meta for online display advertising services, adding that “a careful assessment of evidence did not confirm its initial concerns”.

On March 11, the Commission had opened an investigation to assess whether Google and Meta agreed to weaken and exclude a competing technology to Google’s Open Bidding from the market for displaying ads on publisher websites and apps, in breach of EU antitrust rules.

Rohit Kulkarni
Rohit Kulkarni
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