EU, UK open competition probe into Facebook's Marketplace

The allegations regard classified ads data use and breach of competition rules

Photo: AP

Regulators in the UK and the EU announced on Friday the opening of two formal competition investigations into Facebook, marking an extremely rare coordinated probe on a big US tech firm.

As per the announcement from the European Commission, its antitrust probe is aimed at assessing whether Facebook uses the vast troves of data at its disposal to undercut competitors in the classified adverts sector. These concerns relate to its fast-growing sales platform, Facebook Marketplace. The investigation will also seek to determine whether the link between the main Facebook social network and Facebook Marketplace is in breach of EU competition rules.

So now the EU executive branch is to examine whether the tech giant illegitimately taps into commercially sensitive information it gathers from companies that advertise on its social network to put itself at advantage when promoting Marketplace.

“Facebook is used by almost 3 billion people on a monthly basis and almost 7 million firms advertise on Facebook in total. Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups,” European Commission Vice President Margrethe Vestager said in a statement on the move.

“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,” she added.

After initial investigations, EU officials suspect Facebook might use information from competitors to help Marketplace do better. For example, information on users' preferences gleaned from competitors' advertisement activities could be used to tailor Marketplace, a press release from the commission stated.

Meanwhile, the UK’s Competition and Markets Authority said it is also investigating whether Facebook is abusing a dominant position in the social media or digital advertising markets through its collection and use of ad data.

The CMA said it will look into whether Facebook has unfairly used the data gained from its advertising and single sign-on option, known as Facebook Login, to benefit its buying and selling platform, Facebook Marketplace, as well as its online dating service, Facebook Dating.

“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,” Andrea Coscelli, chief executive of the CMA, said in a statement.

“Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice,” he added.

Both probes come at a time when big tech firms are facing increasing amounts of scrutiny around the world as their products continue to impact billions of people’s lives. The European Commission has already launched probes into Amazon, Google and Microsoft over the last few years, while the CMA has also launched probes into Google and Apple since it became an independent regulator in its own right in January following Britain’s exit from the EU.

“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,” a Facebook spokesperson commented.

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