The European Commission has opened a formal antitrust investigation to assess whether Facebook violated EU competition rules by using advertising data gathered in particular from advertisers in order to compete with them in markets where Facebook is active such as classified ads. The formal investigation will also assess whether Facebook ties its online classified ads service “Facebook Marketplace” to its social network, in breach of EU competition rules.
Facebook is a social networking service that allows registered users to create profiles, upload photos and videos, send messages and connect with other people. Facebook also offers an online classified ads service, called Facebook Marketplace, which is a platform for Facebook users where they can buy and sell goods from each other.
As part of its in-depth investigation, the Commission will examine in detail whether Facebook’s position in social networks and online advertising allows it to harm competition in neighbouring markets, where Facebook is also active thanks to its social network, and in particular in online classified ads.
When advertising their services on Facebook, companies, which also compete directly with Facebook, may provide it commercially valuable data. Facebook might then use this data in order to compete against the companies which provided it.
This applies in particular to online classified ads providers, the platforms on which many European consumers buy and sell products. Online classified ads providers advertise their services on Facebook’s social network. At the same time, they compete with Facebook’s own online classified ads service, “Facebook Marketplace”.
Following a preliminary investigation, the Commission has concerns that Facebook may distort competition for the online classified ads services. In particular, Facebook might make use of the data obtained from competing providers in the context of their advertising on Facebook’s social network, to help Facebook Marketplace outcompete them. Facebook could, for instance, receive precise information on users’ preferences from its competitors’ advertisement activities and use such data in order to adapt Facebook Marketplace.
The Commission will also examine whether the way Facebook Marketplace is embedded in the social network constitutes a form of tying which gives it an advantage in reaching customers and forecloses competing online classified ads services.
If proven, the practices under investigation may breach EU competition rules on anticompetitive agreements between companies (Article 101 of the Treaty on the Functioning of the European Union (TFEU)) and/or on the abuse of a dominant position (Articles 102 TFEU).
The Commission will now carry out its in-depth investigation as a matter of priority. The opening of a formal investigation does not prejudge its outcome.
The UK’s Competition and Markets Authority (CMA) has today also launched its own investigation into Facebook’s use of data. The European Commission will seek to work closely with the CMA as the independent investigations develop.
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