Facebook is facing renewed antitrust scrutiny in Europe.
The UK’s Competition and Markets Authority (CMA) and the European Union’s Competition Commission both today announced formal investigations into the social media giant’s operations – with the timing likely to be coordinated.
Competition regulators will investigate how Facebook uses data on advertising customers and users of its single sign-on tool — specifically looking at whether it uses this data unfairly against competitors in markets such as classified ads. As does the lever.
The pair also said that they would try to work together as their independent investigation progresses.
With the UK outside the European trade bloc (post-Brexit), national competition watchdogs have a free rein to pursue investigations that may similar or overlap with antitrust investigations being conducted by the EU as well.
And the two Facebook investigations appear similar on the surface — both focused broadly on how Facebook uses advertising data. (Though results can of course vary.)
Here, the danger for Facebook is that the dual regulatory action would result in a higher dimension of scrutiny being imposed on its business – with the opportunity to jointly act and cross-reference its responses (not to mention a minor investigative competition). for UK and EU agencies).
The CMA said it is looking into whether Facebook has gained an unfair advantage over competitors in providing services for online classified ads and online dating based on how it collects and uses certain data.
In particular, the UK regulator said it is concerned that Facebook may gain an unfair advantage over competitors providing services for online classified ads and online dating.
Facebook plays into both spaces through Facebook Marketplace and Facebook Dating, respectively.
In a statement on its action, CMA’s CEO, Andrea Cocelli, said: “We would like to thoroughly investigate Facebook’s use of data to assess whether its business practices render it inappropriate in the online dating and classified advertising sectors. Any such advantage can make it harder for competing firms to succeed, including new and small businesses, and may reduce customer choice.
The European Commission investigation – similarly – will focus on whether Facebook violated EU competition rules by using advertising data collected from advertisers to compete in markets where it is active.
However it cites classified ads as an example of a neighboring market of particular concern for its investigation.
The EU investigation has another element, however, as it said it is also looking into whether Facebook links its online classified ad service to its social network in violation of the bloc’s competition rules.
In a separate (national) action, Germany’s competition authority late last year opened a similar investigation for tying Oculus to Facebook using a Facebook account. So Facebook now has several antitrust investigations on its plate in Europe, largely linked to an antitrust lawsuit filed against the states on its home turf back in December 2020.
“When advertising their services on Facebook, companies that compete directly with Facebook may provide it with commercially valuable data. Facebook may use this data against those companies,” the commission said in a press release. able to compete with what it offers.”
“This particularly applies to online classified ad providers, the platforms on which many European consumers buy and sell products. Online classified ad providers advertise their services on Facebook’s social network. Also, they are Facebook’s own online classified ad providers. Classified advertising services compete with the Facebook Marketplace.”
The commission said preliminary investigations already conducted have raised concerns that Facebook is distorting the market for online classified advertising services. It will now take a deeper look to make a full decision on whether the social media giant is breaking EU competition rules.
Commenting in a statement, EVP Margaret Vestager, who also leads competition policy for Block, said: “Facebook is used by approximately 3 billion people on a monthly basis and approximately 7 million firms advertise on Facebook in total. Facebook collects vast swathes of data on the activities of users of its social network and beyond, allowing it to target specific customer groups. We’ll look at this in detail to see if this data helps Facebook specifically in the online classified ads sector. Gives an unfair competitive advantage, where people buy and sell stuff every day, and where Facebook competes with the companies it collects data from. In today’s digital economy, data should not be used in a way that Distort the competition.”
Reached for comment on the latest European antitrust investigation, Facebook sent us this statement:
“We are always developing new and better services to meet the growing demand for people who use Facebook. Marketplace and Dating give people more choices and both products operate in a highly competitive environment with many large incumbents. We will continue to fully cooperate with the investigation to demonstrate that they have no merit.”
So far, Facebook has been a blind spot for the commission’s competition authority — with numerous investigations and enforcement by the block against other tech giants, such as (most notably) Google and Amazon.
But Vestager’s Facebook ‘dry patch’ is now officially over. (The EU’s unofficial investigation into the Facebook Marketplace had been ongoing since March 2019.)
CMA, meanwhile, is working on sweeping pro-competition regulatory reforms aimed at tech giants like Facebook and Google as part of a UK plan to clip the wings of edtech monopolies.