The European Commission and UK regulators have opened antitrust investigations into Facebook over concerns that the Marketplace service is unfairly distorting competition for classified ads. Both are interested in whether Facebook has unfairly used ad data to compete in the classifieds ad market, and are cooperating as part of the investigation.
Margrethe Vestager, head of competition at the European Commission said, Facebook collects a wealth of data about the activities of its social network users and beyond, enabling it to target specific customer groups. We will look in detail at whether this data gives Facebook an undue competitive advantage especially in the online classifieds ad sector, where people buy and sell goods every day, and where Facebook also competes with the companies from which it collects data.
The panel says an initial investigation has raised concerns that Facebook may be using data from competing classified ad services that advertise on its platform to compete with it. The Commission and the UK Competition and Markets Authority (CMA) will now conduct an in-depth formal investigation to assess these concerns.
In addition to concerns about the Facebook Marketplace and classified ads, the UK's CMA is also investigating the Facebook dating service on similar grounds.
In a statement, a Facebook spokesperson said it believed the allegations were unfounded, adding that both Facebook Marketplace and Facebook Dating are part of highly competitive markets. We are always developing new and better services to meet the increasing demand of people who use Facebook. The market and dating give people more choices and both products operate in a very competitive environment with many existing companies. We will continue to fully cooperate with the investigations to prove that they are baseless.
The European Commission has been examining the Facebook Marketplace for years. Reuters notes that European officials sent surveys about the service in 2019, only to Facebook to resist an investigation the following year, arguing that the size of the EU document's request meant it would have to hand over irrelevant, but highly sensitive information.
Marketplace launched on Facebook in 2016, and it allows people to buy and sell items from locals. Facebook is now used by 800 million Facebook users in 70 countries. Competitors have reportedly complained that Facebook is giving itself an unfair advantage by being able to advertise Marketplace for free to its two billion users.
It was the first time that Facebook had been formally investigated by the European Union, the Financial Times previously noted, with the case joining similar anti-competitive investigations moving Apple, Google, Amazon, and Microsoft. Earlier this year, the European Union formally accused Apple of violating antitrust rules with its App Store policies, and last November the commission said Amazon was abusing data it collects from overseas market sellers.