Facebook is facing new antitrust investigations in Europe.
The UK’s Competition and Markets Authority (CMA) and the EU Competition Commission both announced a formal investigation into the social media giant’s activities today – with likely coordinated timing.
Competition regulators will look into how Facebook uses data from advertisers and users of its single sign-on tool – specifically, whether it uses that data as an unfair lever against competitors in markets like classifieds.
The couple also said they will seek to work closely together as part of their independent investigation.
With the UK outside the European trading bloc (post-Brexit), the national competition authority has a free hand to conduct investigations that are similar to or overlap with EU antitrust investigations.
And the two Facebook surveys look similar on the surface – both focus largely on how Facebook uses advertising data. (Although the results can of course be different.)
The danger for Facebook here is that its business will be subject to higher scrutiny through duplicate regulatory measures – with the ability to collaborate and cross-reference responses (not to mention a small investigation competition between the UK and EU agencies).
The CMA said it is looking to see if Facebook has gained an unfair advantage over competitors by collecting and using certain data in providing services for online classified ads and online dating.
In particular, the UK regulator said it was concerned that Facebook may have gained an unfair advantage over competitors offering online classifieds and online dating services.
Of course, Facebook plays in both areas, via Facebook Marketplace and Facebook Dating.
In a statement on his action, CMA CEO Andrea Coscelli said: “We intend to thoroughly investigate Facebook’s use of data to assess whether its business practices give it an unfair advantage in online dating and classifieds. Each of these benefits can make competing businesses, including new and smaller businesses, more difficult to succeed and limit customer choice. “
The European Commission’s investigation will also focus on whether Facebook has violated EU competition rules by using advertising data from advertisers to compete with them in markets where it is active.
Although it only cites classified ads as an example of the neighboring market that is particularly worrying for its investigation.
However, the EU’s investigation has one more element as it, as it said, also examines whether Facebook is tying its online classified ad service to its social network in violation of the bloc’s competition rules.
In a separate (national) lawsuit, the German antitrust authority initiated a similar investigation at the end of last year into the connection of Oculus to the use of a Facebook account by Facebook. So Facebook now has multiple antitrust investigations on its plate in Europe, compounding its problems with the massive federal antitrust lawsuits that were also filed on domestic territory in December 2020.
“When promoting their services on Facebook, companies that also compete directly with Facebook may provide commercially valuable data. Facebook could then use this data to compete with the companies that provided it, ”the commission noted in a press release.
“This is especially true for online classifieds providers, the platforms on which many European consumers buy and sell products. Online classifieds providers advertise their services on the Facebook social network. At the same time, they are competing with Facebook’s own online classified ad service ‘Facebook Marketplace’. “
The Commission added that a preliminary investigation it had already carried out had raised concerns that Facebook was distorting the market for online classified advertising services. It is now being examined in detail whether the social media giant violates the EU competition rules.
In a statement, EPP Margrethe Vestager, who also heads the bloc’s competition policy, added: “Facebook is used by almost 3 billion people every month and nearly 7 million companies advertise on Facebook in total. Facebook collects huge amounts of data about the activities of users on its social network and beyond in order to target customer groups. We will delve deeply into whether this data gives Facebook an unjustified competitive advantage, particularly in the area of online classified ads, 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 to distort competition. “
When asked to comment on the latest European antitrust investigations, Facebook sent us this statement:
“We are constantly developing new and better services to meet the growing demand from Facebook users. Marketplace and dating give people more choice and both products operate in a highly competitive environment with many large established providers. We will continue to cooperate fully in the investigation to show that it is unfounded. “
So far, Facebook has been a small blind spot for the Commission’s competition authority – with several investigations and enforcements carried out by the block against other technology giants such as (above all) Google and Amazon.
But Vestager’s “dry plaster” on Facebook is now officially over. (The EU’s informal investigation into the Facebook marketplace had been ongoing since March 2019.)
The CMA, meanwhile, is working on broader pro-competitive regulatory reforms aimed directly at tech giants like Facebook and Google as part of a UK plan to trim the wings of the adtech duopoly.