The European Commission decided, on Friday 4 June, to open a formal antitrust investigation 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. This procedure will also assess whether Facebookties its online classified ads service Facebook Marketplace to its social network in breach of EU competition rules.
According to Margrethe Vestager, Executive Vice-President for Competition Policy, almost 3 billion people use Facebook every month and a total of almost 7 million companies advertise their services on Facebook. “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 distorts competition”, she says.
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 it is also active thanks to its social network and, in particular, in online classified ads.
When advertising their services on Facebook, companies, which also directly compete with Facebook may provide it commercially valuable data. Facebook might then use this data in order to compete against the companies which provided it.
This applies in particular to online classified ads providers, the platforms on which many European consumers buy and sell products. Online classified ads providers advertise their services on Facebook’s social network and at the same time, they compete with Facebook’s own online classified ads service, Facebook Marketplace.
The Commission is concerned that Facebook could distort competition for the online classified ads services. Facebook might make use of data obtained from competing providers in the context of their advertising on Facebook’s social network, to help Facebook Marketplace outcompete them. Facebook could, for example, receive precise information on users’ preferences from its competitors’ advertisement activities and use such data in order to adapt Facebook Marketplace.
The Commission will also examine whether the way Facebook Marketplace is embedded in the social network constitutes a form of tying which gives it an advantage in reaching customers and forecloses competing online classified ads services.
If proven, the practices under investigation may breach EU competition rules on anticompetitive agreements between companies (Article 101 of the Treaty on the Functioning of the European Union (TFEU)) and/or on the abuse of a dominant position (Article 102 TFEU).
The CMA, the UK Competition and Markets Authority, also launched its own investigation today into Facebook’s use of data. The European Commission will seek to work closely with the CMA as the independent investigations develop. Link to the case: https://bit.ly/3cfkeSw (Original version in French by Lionel Changeur)