Meta Platforms, the parent company of Facebook, is facing a significant fine from the European Union over allegations of anti-competitive practices in the classified advertising market.
TakeAway Points:
- Meta faces a potential fine from the EU of up to 10% of its $135 billion global revenue for engaging in anti-competitive practices in classified ads.
- The EU’s decision is part of a broader crackdown on Big Tech, with recent actions against Google and Apple highlighting regulatory pressure.
- Meta disputes the accusations, claiming that Facebook Marketplace operates in a competitive manner, and plans to appeal if found guilty.
EU antitrust investigation
The European Union is threatening to impose a sizable fine on Facebook’s parent firm, Meta Platforms, for alleged anti-competitive behaviour in the classified advertising industry. EU regulators claim that Meta links its free Marketplace services with its social network to undermine competitors.
This decision could be announced as early as next month, according to sources familiar with the matter. The investigation is one of the final cases overseen by Margrethe Vestager, the outgoing competition chief of the EU.
The European Commission initiated this antitrust probe in 2019 following accusations from rivals that Facebook was abusing its dominant position by offering free services while profiting from data collected on the platform. In December 2022, the Commission’s initial findings indicated that Meta was distorting competition in the online classified ads market and using data accessed from businesses for free to sell ads to users.
Meta has denied these claims, stating, “The claims made by the European Commission are without foundation. We continue to work with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive.” If found guilty, Meta could face penalties of up to 10% of its global annual revenue, which amounted to nearly $135 billion in 2023. However, regulators typically issue much lower sanctions.
Regulatory measures
According to the report, the EU’s decision on Meta’s case comes amid a broader crackdown on Big Tech companies. Margrethe Vestager has been known for her tough stance against major tech firms, including Apple, Google, and Microsoft. Recently, the European Court of Justice ruled that Google had abused its market power by ranking its shopping services over rivals, marking a significant victory for Vestager. Additionally, the EU’s top court ordered Apple to pay €13 billion in back taxes, overturning a previous ruling.
Other jurisdictions are also taking action against Meta. The UK’s Competition and Markets Authority closed a similar probe last year after Meta promised to curb the use of data it gathers from other businesses. This global scrutiny highlights the increasing regulatory pressure on tech giants to ensure fair competition and data practices.
Meta’s position on the matter
Meta has argued that Facebook Marketplace operates in a highly competitive landscape and does not use data from rivals on the platform to compete against them. The company launched Facebook Marketplace in 2016, which has become a popular platform for buying and selling second-hand goods, especially household items like furniture. However, new entrants in specialist markets, such as fashion, have emerged as competitors in recent years.
Meta’s spokesperson reiterated the company’s stance, emphasizing that their product innovation is both pro-consumer and pro-competitive. The company can appeal against the case if found guilty, which could potentially delay any final decision.
