European Commission Launches Antitrust Investigation Against Facebook

The European Commission has launched an official investigation against the American corporation Facebook in the case of a possible violation of antitrust laws during the operation of the service for the sale of goods Facebook Marketplace.

The European Commission has launched a formal antitrust investigation to assess whether Facebook is violating EU competition rules by using advertising data received, in particular from advertisers, to compete with them in markets where Facebook is active, such as classified ads. The formal investigation will also assess whether Facebook is linking Facebook Marketplace’s classified ads service to its social network, in violation of EU competition rules. Executive Vice President Margrethe Vestager in charge of competition policy said:

“Facebook has nearly 3 billion monthly users of data, and in total, almost 7 million companies advertise on Facebook. Facebook collects a huge amount of data about user activity on and off its social network, which allows it to target specific customer groups. We’ll take a closer look at whether this data gives Facebook an undue competitive advantage, particularly in the online classifieds sector, where people buy and sell products every day, and where Facebook also competes with the companies from which it collects data. In today’s digital economy, data should not be used in a way that distorts competition. ”

Facebook is a social networking service that allows registered users to create profiles, upload photos and videos, send messages and connect with other people. Facebook also offers an online classified ads service called the Facebook Marketplace, which is a platform for Facebook users where they can mutually buy and sell products.

As part of its in-depth investigation, the Commission will examine in detail whether Facebook’s position on social media and online advertising allows it to harm competition in neighboring markets, where Facebook is also active, thanks to its social network and, in particular, in online classifications.

By advertising their services on Facebook, companies that also directly compete with it can provide it with commercially valuable data. Facebook can then use this data to compete with the companies that provided it.

This applies in particular to the providers of online advertisements, the platforms on which many European consumers buy and sell products. Providers of classified online ads advertise their services on the social network Facebook. At the same time, they compete with their own classified ads service, Facebook Marketplace.

After preliminary investigation, the commission expressed concerns that Facebook could distort the competition for online ad services. In particular, it may use data from competing providers in the context of their advertising on Facebook to help Facebook Marketplace outperform them. Facebook may, for example, obtain accurate information about user preferences from the advertising activities of its competitors and use this data to tailor the Facebook Marketplace.

The commission will also examine whether the way the Facebook Marketplace is embedded into the social network is a form of linking that gives it an advantage in customer acquisition and precludes the possibility of using competing online classified ad services. If it is proven that the practice being investigated may violate EU competition rules in relation to anti-competitive agreements between companies (Article 101 of the Treaty on the Functioning of the European Union (TFEU)) and / or abuse of dominance (Article 102 TFEU).

The Commission will now conduct its in-depth investigation as a matter of priority. The beginning of an official investigation does not prejudge its outcome. The UK Competition and Markets Authority (CMA) also launched its own investigation of Facebook’s data use today. The European Commission will seek to work closely with the CMA as independent investigations develop.

Prerequisites

Section 101 TFEU ​​prohibits anti-competitive agreements and decisions of business associations that prevent, restrict or distort competition in the EU single market. Section 102 TFEU ​​prohibits abuse of dominance. The implementation of these provisions is defined in the antimonopoly regulation (Resolution Council No. 1/2003 ), which can also be applied by national competition authorities.

Article 11 (6) of the competition regulation provides that the opening of a case by a commission exempts the competition authorities of member states from their competence to also apply EU competition rules to relevant practice. Article 16 (1) further provides that domestic courts should avoid making decisions that would conflict with a decision before the commission in the proceedings it initiated.

The Commission informed Facebook and the competition authorities of the member states about the initiation of proceedings in this case.

There is no legal deadline for the termination of the antitrust investigation. The length of the antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the companies concerned have cooperated with the commission, and the exercise of defense rights.

More information on this investigation will be available at website commissions on competition in public case register under the number AT.40684.





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