The European Commission and the UK regulators have opened formal anti-trust investigations into Facebook for allegedly abusing its dominant position in the social media/digital advertising markets through the collection and use of advertising data.
The European Commission opened a formal probe to assess whether Facebook violated EU competition rules by using advertising data gathered in particular from advertisers in order to compete with them in markets where Facebook is active such as classified ads.
The formal investigation will also assess whether Facebook ties its online classified ads service “Facebook Marketplace” to its social network, in breach of EU competition rules, the commission said in a statement.
“We will look in detail at whether this data gives Facebook an undue competitive advantage in particular on the online classified ads sector, where people buy and sell goods every day, and where Facebook also competes with companies from which it collects data. In today’s digital economy, data should not be used in ways that distort competition,” said Executive Vice-President Margrethe Vestager, in charge of competition policy.
As part of its in-depth investigation, the Commission will examine in detail whether Facebook’s position in social networks and online advertising allows it to harm competition in neighbouring markets, where Facebook is also active thanks to its social network, and in particular in online classified ads.
Following a preliminary investigation, the Commission expressed concerns that Facebook may distort competition for the online classified ads services.
“In particular, Facebook might make use of the data obtained from competing providers in the context of their advertising on Facebook’s social network, to help Facebook Marketplace outcompete them,” it said.
Meanwhile, the Competition and Markets Authority (CMA) in the UK has launched a probe into whether Facebook has gained an unfair advantage over competitors in providing services for online classified ads and online dating, through how it gathers and uses certain data.
The CMA will look into whether Facebook has unfairly used the data gained from its advertising and single sign-on to benefit its own services, in particular Facebook Marketplace – where users and businesses can put up classified ads to sell items — and Facebook Dating — a dating profile service it launched in Europe in 2020.
The CMA said on Friday that it will seek to work closely with the European Commission as the independent investigations develop.
“We intend to thoroughly investigate Facebook’s use of data to assess whether its business practices are giving it an unfair advantage in the online dating and classified ad sectors. Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice,” said Andrea Coscelli, Chief Executive of the CMA.
This is the third investigation into a suspected breach of competition law the CMA has opened recently in digital markets. It is also investigating Google’s ‘privacy sandbox’ and Apple’s AppStore.