Facebook Marketplace Accused of Breaching E.U.’s Antitrust Rules: ‘Distorting Competition’

Facebook Marketplace Accused Of Breaching E.U.'s Antitrust Rules: 'Distorting Competition'
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The E.U.’s European Commission has accused Facebook Marketplace of breaching antitrust rules.

The Commission said due to Facebook dominating both social networks and an online classified ads market; it has been “distorting competition” by coupling the two services.

The E.U. adds that “users of Facebook automatically have access to Facebook Marketplace, whether they want it or not,” which is a concern.

The European Commission Statement of Objections released Monday said it had informed Facebook parent Meta that a “preliminary view” showed the company in violation.

A Statement of Objection is a pre-curser to an investigation into what it believes is a violation of E.U. antitrust rules.

If an investigation concludes Facebook has violated antitrust rules, the Commission can impose a fine of up to 10% of Meta’s annual worldwide turnover.

Margrethe Vestager, the Commission’s executive V.P. for competition policy, 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,” Vestager added.

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“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,” Vestager continued.

“If confirmed, Meta’s practices would be illegal under our competition rules.”

The report also raises concerns Meta is imposing “unfair trading conditions” on Marketplace competitors who pay to advertise on Facebook and Instagram via ‘onerous terms and conditions.’ This allows Meta to use data derived from competitors and benefit their own Marketplace service – this infringes on Article 102 of the E.U.’s Treaty of the Functioning of the European Union.

The investigation length will depend on various factors, the Commission says.

The news comes a month after Meta announced it was laying off thousands of staffers due to an economic downturn.

Another E.U. investigation into potential anti-competitive behavior by Facebook, launched last June, is still ongoing.

In August, the Federal Trade Commission filed an amended antitrust complaint against Facebook after it first was dismissed.

Earlier this year, the U.K.’s Competition and Markets Authority (CMA) ordered Meta to sell GIF provider, Giphy, forcing the company to unwind a $400 million acquisition.

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