European Commission Informs Meta That Facebook Marketplace Is Breaking Antitrust Rules for Online Classifieds Ads

The European Commission has informed Meta (owner of Facebook) that the company is breaching European Union antitrust rules by distorting competition for online classified ads.

The Commission has sent a Statement of Objection to Meta over abusive practices—namely by tying its online classified ads service, Facebook Marketplace, to Facebook's platform. The statement also asserts that Meta is imposing unfair trading conditions on Facebook Marketplaces' competitors for Meta's benefit.

The investigation officially opened in June 2021.

The Statement of Objections says:

The Commission preliminary finds that Meta is dominant in the market for personal social networks, which is across Europe, as well as the national markets for online display advertising on social media.

The Commission preliminarily finds that Meta abused its dominant positions in the following two ways:

• First, Meta ties its online classified ads service Facebook Marketplace withits dominant personal social network Facebook. This means that users of Facebook automatically have access to Facebook Marketplace, whether they want it or not. The Commission is concerned that competitors of Facebook Marketplace may be foreclosed as the tie gives Facebook Marketplace a substantial distribution advantage that competitors cannot match.
• Second, Meta unilaterally imposes unfair trading conditions on competing online classified ads services which advertise on Facebook or Instagram. The Commission is concerned that the terms and conditions, which authorise Meta to use ads-related data derived from competitors for the benefit of Facebook Marketplace, are unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta's platforms. Such conditions impose a burden on competitors and only benefit Facebook Marketplace

If confirmed, these practices would infringe Article 102 of the Treaty on the Functioning of the European Union (‘TFEU') that prohibits the abuse of a dominant market position.

The sending of a Statement of Objections does not prejudge the outcome of an investigation.

Margrethe Vestager, European Commissioner for Competition and Executive Vice-President in charge of competition policy European Commissioner for Competition, said:

"With its Facebook social network, Meta reaches globally billions of monthly users and millions active advertisers. Our preliminary concern is that Meta ties its dominant social network Facebook to its online classified ad services called Facebook Marketplace. This means Facebook users have no choice but to have access to Facebook Marketplace.

"Furthermore, we are concerned that Meta imposed unfair trading conditions, allowing it to use of data on competing online classified ad services. If confirmed, Meta’s practices would be illegal under our competition rules."

Antoine Jouteau, CEO at Adevinta, which operates rivals to Facebook Marketplace in several European markets, has already let his feelings be known in a post published on LinkedIn:

"I strongly believe that a level playing field in digital markets is directly beneficial to consumers, this is why I welcome the decision of the European Commission to issue this Statement of Objections.

"The statement highlights concerns around Meta automatically tying its Facebook Marketplace with its social network and thereby potentially hindering fair competition."

There is no end-date to this investigation for now. However, the worst-case scenario for Meta is that the Commission finds sufficient evidence of an infringement, at which point the Commission may prohibit or limit Meta's operations or even impose a fine of up to 10% of Meta's annual worldwide turnover.

Online Marketplaces covered Facebook's and Google's respective forays into real estate portals' territory in 2020. Read it in full here.