Facebook Marketplace has been accused of breaching antitrust rules by the E.U.’s European Commission.
The European Commission, which is the executive branch of the European Union (E.U.), released a Statement of Objections on Monday saying it had informed Facebook’s parent company meta that in its “preliminary view” the company had breached the rules.
A Statement of Objections is the first step the Commission takes when it begins an investigation into what it believes are a violation of E.U. antitrust rules. It does not mean the outcome has been predetermined.
But if an investigation concludes that antitrust rules have been violated, the Commission has the power to impose a fine of up to 10% of meta’s annual worldwide turnover as well as a prohibition of further rule-breaking behavior.
The Commission said in its Statement of Objections that because meta is dominant in both the social networks and online classified ads market, it has been “distorting competition” by tying Marketplace to Facebook. In particular the fact that “users of Facebook automatically have access to Facebook Marketplace, whether they want it or not” is of concern.
The Commission also raised concerns that meta was imposing “unfair trading conditions” on Marketplace competitors that advertise on Facebook or Instagram, which is also owned by meta, via onerous terms and conditions. These apparently allow meta to use the data derived from competitors via ads to boost Marketplace.
Both practices would infringe on Article 102 of the E.U.’s Treaty of the Functioning of the European Union.
“With its Facebook social network, meta reaches globally billions of monthly users and millions active advertisers,” said Margrethe Vestager, the Commission’s executive VP for 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 /confirm/ied, meta’s practices would be illegal under our competition rules.”
There is no set timeline for the investigation, with the Commission saying the length of the inquiries depends on factors including meta’s cooperation and the complexity of the case.
The news is the latest blow for beleaguered meta, which announced last month it was laying-off thousands of staffers. Last June the E.U. launched another investigation into potential anti-competitive behavior by Facebook, which is still ongoing. Then in August, the Federal Trade Commission in the U.S. filed an amended antitrust complaint against the company after its first was dismissed.
Just a few months later the U.K.’s Competition and Markets Authority (CMA) ordered meta to sell GIF provider Giphy. Despite meta attempting to appeal the decision, the CMA doubled down on the decision this past October, meaning meta will now have to unwind a $400 million acquisition of the company.
