Having already accused Apple of choking market competition, the EU has now opened an antitrust probe against social media giant Facebook.
The European Commission will investigate whether Facebook has breached EU competition laws by connecting its online classified ads service Facebook Marketplace to its social network, giving it an unfair advantage over smaller competitors.
Many firms attempt to compete with Facebook Marketplace while simultaneously advertising on the social media platform. Using insights from the advertisers across its social media site to fuel growth in Facebook Marketplace would give Menlo Park a massive advantage – but this would also violate EU competition laws. The probe is intended to determine whether this is what’s happened.
Executive vice-president Margrethe Vestager will lead the probe, having already made a name for herself as a thorn in Silicon Valley’s backside. She has previously investigated and charged the likes of Google, Apple and Amazon.
“Facebook is used by almost three billion people on a monthly basis and almost seven million firms advertise on Facebook in total,” Vestager said, announcing the probe on Friday. “Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups.
“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.”
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The news comes a the UK’s Competition and Markets Authority (CMA) also today launched its own investigation into Facebook’s use of data. In addition to investigating the links between the social media platform and Facebook Marketplace, the British regulator will also look into the ties with Facebook’s online dating arm and the social media platform.
“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,” said Andrea Coscelli, chief executive of the CMA.
“Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice. We will be working closely with the European Commission as we each investigate these issues, as well as continuing our coordination with other agencies to tackle these global issues.”
The investigation will be handled by the CMA’s new Digital Markets Unit (DMU), launched in April. The DMU is also currently creating codes of conduct for Big Tech firms.
The CMA launched an antitrust investigation into Apple’s App Store earlier this year.
A Facebook company spokesperson told Verdict: “We are always developing new and better services to meet evolving demand from people who use Facebook. Marketplace and Dating offer people more choices and both products operate in a highly competitive environment with many large incumbents. We will continue to cooperate fully with the investigations to demonstrate that they are without merit.”