Facebook Marketplace has been accused of breaching antitrust rules by the European Union’s European Commission.
The European Commission, the executive branch of the European Union (EU), issued a statement of objections on Monday saying it had told Facebook parent company Meta that the company had breached the rules in its “primary view”.
The Statement of Objections is the first step the Commission takes when it launches an investigation into what it believes is a breach of EU antitrust rules. Not that 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 sales volume as well as to prohibit further rule-breaking behavior.
In its statement of objections, the commission said that because Meta is dominant in both the social networking and online classifieds market, it could “distort competition” by linking Marketplace to Facebook. In particular, the fact that “Facebook users can automatically access the Facebook Marketplace, whether they want to or not” is troubling.
The committee also raised concerns that Meta was imposing “unfair trading terms” on Marketplace competitors who advertise on Facebook or Instagram, also owned by Meta, through onerous terms and conditions. These appear to allow Meta to use data derived from competitors via ads to enhance the Marketplace.
Both operations would violate Article 102 of the Treaty on the Functioning of the European Union.
“Through its social network on Facebook, Meta globally reaches billions of monthly users and millions of active advertisers,” said Margrethe Vestager, Executive Vice President for Competition Policy at the Commission. Our initial concern is that Meta connects its dominant social network Facebook to an online classifieds service called Facebook Marketplace. This means that Facebook users have no choice but to access the Facebook Marketplace. Furthermore, we are concerned that Meta has imposed unfair trading terms, allowing it to use the data on competing online classifieds services. If confirmed, Meta’s practices would be illegal under our competition rules.”
There is no set timeline for the investigation, as the commission says the length of investigations depends on factors including Meta’s cooperation and the complexity of the case.
The news is the latest blow to beleaguered company Meta, which announced last month it would lay off thousands of employees. Last June, the European Union launched another investigation into possible anti-competitive behavior on the part of Facebook, which is still ongoing. Then in August, the US Federal Trade Commission filed an amended antitrust complaint against the company after its first complaint was dismissed.
Just a few months later, the UK’s Competition and Markets Authority (CMA) ordered Meta to sell GIF provider Giphy. Despite Meta’s attempt to appeal the decision, the CMA doubled the decision last October, which means Meta will now have to cancel a $400 million acquisition of the company.
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