The European Union and Britain launched parallel competition probes on Friday into whether Facebook uses data from advertisers to unfairly dominate the online classifieds market.
The US social media behemoth sells classified advertising on its Marketplace service, but also gathers data from commercial advertising that may give it an unfair advantage — a charge the firm declared “without merit”.
Investigators will also probe whether Facebook’s single user log-in allows it to unfairly use data gathered across its social media, dating app and advertising platforms.
The cases opened by the European Commission and Britain’s Competition and Markets Authority (CMA) are separate, but the regulators are working closely together.
“Facebook collects vast troves of data on the activities of users of its social network and beyond,” EU vice-president and competition chief Margrethe Vestager said.
“We will look in detail at whether this data gives Facebook an undue competitive advantage in particular on the online classified ads sector, where people buy and sell goods every day, and where Facebook also competes with companies from which it collects data,” she said.
“In today’s digital economy, data should not be used in ways that distort competition.”
A Facebook spokesperson responded in an email: “We will continue to cooperate fully with the investigations to demonstrate that they are without merit.
“We are always developing new and better services to meet evolving demand from people who use Facebook. ‘Marketplace’ and ‘Dating’ offer people more choices and both products operate in a highly competitive environment with many large incumbents.”
– Marketplace ads –
The formal probe follows a preliminary investigation focused on Facebook’s Marketplace classifieds service — available to most of its three billion users.
Companies advertising on Marketplace have to provide data to Facebook which the European Commission said led to concerns that the internet giant may distort competition.
“Facebook could, for instance, receive precise information on users’ preferences from its competitors’ advertisement activities and use such data in order to adapt Facebook Marketplace,” it said.
The EU executive is also concerned about how Marketplace is integrated into Facebook’s core social network platform — “a form of tying which gives it an advantage in reaching customers and forecloses competing online classified ads services”.
There is no deadline for the probe to be wrapped up, with the commission saying its duration depended on factors including the complexity of the case.
– Internet gatekeepers –
The European Commission noted in its statement that former EU member Britain’s CMA also on Friday opened its own probe into the way Facebook uses data.
Britain has left the EU and now runs its own competition regime, but both regulators said they would work closely together to investigate Facebook.
Andrea Coscelli, chief executive of the CMA — which set up a “Digital Markets Unit” in April — said they would assess whether Facebook’s business practices are giving it an unfair advantage in the online dating and classified ad sectors.
“Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice.”
Last month, Brussels launched another probe into Facebook, related to its buyout of a US startup, Kustomer, that specialises in helping businesses interact with customers online.
Vestager and the European Commission have often clashed with US digital giants in the past, and has formally accused Apple of unfairly squeezing out rivals from its app store.
The EU is currently preparing an ambitious law, known as the Digital Markets Act, that will set up special rules for so-called “gatekeepers” — the largely US platforms that dominate the consumer internet.