The European Commission accuses Meta of abusive practices

December 20, 2022 by
Frank Calviño

The European Commission (EC) has accused Meta of abusive practices to favor Facebook Marketplace in the online classified ads competition. Brussels considers the company to be in breach of European Union antitrust rules and censures Meta for linking its online classified ads service, Facebook Marketplace, to its social network, Facebook.

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"We are concerned that Meta has imposed unfair commercial conditions, allowing it to use data on competing online classified ad services," explained in a statement Margrethe Vestager, vice president of the Community Executive responsible for Competition, while pointing out that by linking Facebook with the classified ad platform, users of the social network "have no choice but to have access to that service."

In the same vein, Vestager recalled that thanks to the social network, "Meta manages to have access to billions of users every month and also to millions of active advertisers," so if the suspicions of Brussels are confirmed regarding the way it makes use of that information, "the US company will be violating the rules of the European Union."

Meta abuses its dominant position 

Specifically, they consider that Meta abusive practices are based on their dominant position in two main ways. First, Meta links its online classified ads service Facebook Marketplace with its dominant personal social network Facebook. This means that Facebook users automatically have access to Facebook Marketplace whether they want it or not. 

The Commission is concerned that Facebook Marketplace's competitors may be foreclosed, as "the tie-in gives Facebook Marketplace a substantial distribution advantage that competitors cannot match."

Secondly, it has been explained by the European institution, "Meta unilaterally imposes unfair commercial conditions on competing online classified ad services advertising on Facebook or Instagram."

The Commission is concerned that the conditions authorizing Meta to use data related to ads derived from competitors for the benefit of Facebook Marketplace "are unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta's platforms." "Such conditions impose a burden on competitors and only benefit Facebook Marketplace," they have reiterated.

Brussels opened an antitrust investigation into this case in June last year and has now formalized the charge by sending the statement of objections to the parties to inform the details of the charge. 

Meta abusive practices could cost them 10% of their annual worldwide turnover 

The Commission has clarified that the sending of a statement of objections does not prejudge the outcome of an investigation but that if these practices are confirmed, Meta will infringe Article 102 of the Treaty on the Functioning of the European Union ('TFEU'), which prohibits the abuse of a dominant market position.

Thus, if the Commission concludes, after the company has exercised its rights of defense, that there is sufficient evidence of an infringement, it may adopt a decision prohibiting the conduct and imposing a fine of up to 10% of the company's annual worldwide turnover.

Meta is an American multinational technology company. Its flagship product is its social network Facebook, which allows registered users to create profiles, upload photos, and videos, send messages and connect with others. Meta also offers an online classified ad service, Facebook Marketplace, where users can buy and sell products.

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