Facebook is facing a fresh pair of antitrust probes in Europe. The UK’s Competition and Markets Authority (CMA) and the EU’s Competition Commission both announced formal investigations into the social media giant’s operations today — with what’s likely to have been coordinated timing.
The competition regulators will scrutinize how Facebook uses data from advertising customers and users of its single sign-on tool — specifically looking at whether it uses this data as an unfair lever against competitors in markets such as classified ads. The pair also said they would seek to work closely together as the progress of their independent investigation.
With the UK outside the European trading bloc (post-Brexit), the national competition watchdog has a freer rein to pursue investigations that may be similar to or overlap with antitrust probes the EU is also undertaking. And the two Facebook investigations appear identical on the surface — both broadly focused on how Facebook uses advertising data. (Though outcomes could, of course, differ.)
The danger for Facebook here is that a higher dimension of scrutiny will be applied to its business as a result of dual regulatory action — with the opportunity for joint working and cross-referencing of its responses (not to mention a bit of investigative competition between the UK and the EU’s agencies).
The CMA said it’s looking at whether Facebook has gained an unfair advantage over competitors in providing services for online classified ads and online Dating through how it gathers and uses specific data. Specifically, the UK’s regulator said it’s concerned that Facebook might have gained an unfair advantage over competitors providing online classified ads and dating services.
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Facebook plays in both spaces, of course, via Facebook Marketplace and Facebook Dating, respectively. In a statement on its action, CMA CEO, Andrea Coscelli, said: “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. Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice.”
The European Commission’s investigation will — similarly — focus on whether Facebook violated the EU’s competition rules by using advertising data gathered from advertisers to compete with them in markets where it is active. Although it only cites classified ads as its example of the neighboring market of particular concern for its probe.
The EU’s probe has another element, though, as it said it’s also looking at whether Facebook ties its online classified ads service to its social network in breach of the bloc’s competition rules. In a separate (national) action, Germany’s competition authority opened a similar probe into Facebook tying Oculus to use a Facebook account at the end of last year. So Facebook now has multiple antitrust investigations in Europe, adding to its woes from the massive state antitrust lawsuit filed against it on its home turf in December 2020.
“When advertising their services on Facebook, companies that compete directly with Facebook may provide commercially valuable data. Facebook might then use this data to compete against the companies which provided it,” the Commission noted in a press release.
“This applies particularly 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’.”
The Commission added that a preliminary investigation it already undertook had raised concerns Facebook is distorting the market for online classified ads services. It will now take an in-depth look to fully judge whether the social media behemoth is breaking EU competition rules.
In a statement, EVP Margrethe Vestager, who also heads up competition policy for the bloc, added: “Facebook is used by almost 3 billion people every month, and nearly 7 million firms advertise on Facebook. Facebook collects vast data on users’ activities on 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, particularly in the online classified ads sector, where people buy and sell goods daily and where Facebook competes with companies from which it collects data. In today’s digital economy, data should not be used in ways that distort competition.” Reached for comment on the latest European antitrust probes, Facebook sent us this statement:
“We are always developing new and better services to meet the evolving demand from Facebook users. Marketplace and Dating offer people more choices, and both products operate in a highly competitive environment with many large incumbents. We will continue fully cooperating with the investigations to demonstrate that they are without merit.”
Up til now, Facebook has been a bit of a blind spot for the Commission’s competition authority — with multiple investigations and enforcements chalked up by the bloc against other tech giants, such as (most notably) Google and Amazon.
But Vestager’s Facebook ‘dry patch’ has now formally ended. (The EU’s informal investigation into Facebook Marketplace has been ongoing since March 2019.) The CMA, meanwhile, is working on broader pro-competition regulatory reforms aimed squarely at tech giants like Facebook and Google under the UK plan to clip the wings of the adtech duopoly.
