Meta, the parent company of Facebook, could potentially receive a significant penalty from the European Union (EU) due to allegations regarding its attempt to control the classified advertisement market. This comes as a part of Brussels’ aim to control and avert anti-competitive behaviour among major tech companies globally.
According to sources knowledgeable about the situation, EU regulators are accusing Meta of interconnecting its complimentary Marketplace offerings with its social media network to suppress competitors. The EU’s decision regarding this matter is expected to be announced in the following month, according to three prominent sources familiar with the topic. This would be one of the last investigations managed by the retiring competition commissioner, Margrethe Vestager. Both the commission and Meta opted not to comment on the ongoing case.
However, Meta did refer back to a prior statement wherein they dismissed the European Commission’s claims as unfounded, stating they will keep working with regulatory authorities to prove that their product innovation is beneficial for both consumers and competition.
This antitrust inquiry kicked off in 2019 subsequent to accusations from competitors alleging Facebook abused its dominant status by offering no-cost services, whilst generating profit from business data collected on the platform. In December 2022, the European Commission initially found that Meta was disrupting competition in the digital classified advertising domain and utilising the freely acquired data from businesses to advertise to users.
Meta has the option to contest the case. If found guilty, punishments could reach 10% of its global yearly revenue, which was nearly $135bn in 2023, although regulators tend to impose much lesser fines.
Meta’s defence is that Facebook Marketplace functions within a highly competitive environment and does not leverage competitor data to compete, as cited by those familiar with the company’s stance.
According to insiders, the impending inception of the next five-year period at the EU’s executive body, led by Commission President Ursula von der Leyen, might further postpone the announcement. It was revealed on Tuesday that Teresa Ribera of Spain will succeed Vestager as the EU’s anti-trust chief.
Vestager, scheduled to depart by November’s commencement, aimed to conclude her inquiry on Meta prior to her departure, following a decade-long tenure in antitrust enforcement, the sources noted.
Over the span of her term at the helm of the bloc’s competition laws, Vestager has consistently aimed her crosshairs at the largest tech enterprises globally. Heavy-hitting tech behemoths such as Apple, Google and Microsoft have all been the targets of her groundbreaking actions.
A significant legal victory was clinched by Brussels against Google just a week ago with a ruling from the European Court of Justice, the bloc’s supreme court. The court found that the search mammoth had manipulated its market dominance, favoring its shopping services over others, thereby illegally skewing the advantage in its favor.
On the same day, the EU’s apex court overturned a prior judgement and commanded Apple to settle €13 billion in outstanding taxes. These dual verdicts were hailed as a triumph for Vestager.
Launched in 2016, Facebook Marketplace is a premium platform for trading pre-owned goods, notably home furnishing items. Yet, lately, niche markets such as apparel, have seen an upswing of competition.
Efforts to control Big Tech are not confined to Vestager alone, but are also being pursued by other jurisdictions who have lodged cases against Meta. After obtaining a commitment from Meta to regulate its data collection from other firms, a similar inquiry was wrapped up last year by the UK’s Competition and Markets Authority. – Copyright The Financial Times Limited 2024.