Meta Platforms is set to receive its first EU antitrust fine in a few weeks for linking its Marketplace ad service with the social network Facebook.
The European Commission’s decision will come more than a year and a half after it accused the American tech giant of giving its Facebook Marketplace ad service an unfair advantage by bundling it with its social media platform.
The EU’s antitrust body also claimed that Meta is abusing its dominant position by unilaterally imposing unfair trading conditions on competing online ad services that advertise on Facebook or Instagram.
Meta could be fined up to $13.4 billion USD, equivalent to 10% of its global revenue in 2023. However, EU sanctions typically fall well below this threshold. The Commission is expected to make its decision in September or October.
In December 2021, the European Commission launched an investigation into Meta’s practices, scrutinising the integration of Facebook and Marketplace. The investigation aimed to determine whether Meta’s conduct distorted competition in the online classified ads sector.
Facebook Marketplace, launched in 2016, allows users to buy and sell goods locally. By integrating Marketplace with Facebook, Meta leveraged the social network’s vast user base to boost its ad service. This strategy, according to the European Commission, has placed competitors at a disadvantage, forcing them to adhere to Meta’s conditions to access Facebook’s extensive audience.
Antitrust Allegations
The European Commission’s preliminary findings suggested that Meta’s integration of Marketplace with Facebook breached EU competition rules. Specifically, the Commission argued that Meta:
- Gained an Unfair Advantage: By combining Marketplace with Facebook, Meta provided its ad service with preferential treatment, exploiting its dominant position in the social networking market.
- Imposed Unfair Conditions: Meta allegedly imposed one-sided and unfair terms on rival online ad services that advertise on its platforms, particularly Facebook and Instagram. This practice, according to the Commission, stifles competition and innovation in the online advertising market.
Meta’s Response and Regulatory Interactions
Meta reiterated its stance regarding the European Commission’s claims, maintaining that the allegations lack merit.
“The claims made by the European Commission are without foundation. We continue to work constructively with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive,” stated Meta spokesperson Matt Pollard.
In an effort to address the EU’s concerns, Meta sought to settle the investigation last year by agreeing to limit its use of competitors’ advertising data for Facebook Marketplace. However, sources revealed to Reuters that this concession was rejected by the EU enforcer.
Interestingly, a similar offer was accepted by the UK’s competition regulator, highlighting differing regulatory approaches between the two regions.
In a separate development, the European Commission recently charged Meta with failing to comply with new landmark tech regulations. These charges relate to Meta’s introduction of a “pay or consent” advertising model launched in November, which has drawn further scrutiny from EU authorities. This model requires users to either pay for an ad-free experience or consent to data collection for targeted advertising, raising additional regulatory concerns about user privacy and data protection practices.
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