The EU accuses the company of abusing its dominant position in the classified advertising market by bundling Facebook Marketplace with its social network, violating EU antitrust rules. The EU is expected to make a decision on this in the fall of this year.
Meta Platforms may be the first tech giant to be fined for antitrust by the European Union, and the fine will be related to Meta's market position and Facebook. The EU accuses the company of abusing its dominant position in the classified advertising market by bundling Facebook Marketplace with its social network, violating EU antitrust regulations. The EU is expected to make a decision this fall.
The EU calls Meta's subscription option a 'pay or agree' model - users either agree to data collection and use the Meta app for free, or pay and do not share data. The service was launched last year on Facebook and Instagram in Europe.
According to media reports, EU antitrust enforcers are preparing to use new powers under the Digital Markets Act to force Facebook to stop using rival advertising platforms’ data to compete against them.
The EU believes that Meta's advertising version social media service violates the Digital Markets Act for two main reasons: 1) users cannot choose a version that collects less data but provides the same personalized advertising service, only two options of no advertising/personalized advertising are available; 2) users are not allowed to exercise their "freely given" consent, that is, to decide whether their personal data can be used for online advertising.
According to a forthcoming EU order, regulatory authorities of the European Commission may require Facebook to create a separate version of the classified advertising platform. Sources said that this will allow users to log in to Facebook Marketplace without logging in to Facebook.
Sources familiar with the matter told the media that the decision is still in the draft stage and may change before the decision date in the fall of this year. The EU Commission is expected to make a decision in September or October, before EU antitrust chief Margrethe Vestager leaves office in November. However, the specific time may be delayed.
If the antitrust decision is passed, Meta may face up to USD 13.4 billion fines, which account for 10% of its global revenue in 2023. If the penalty reaches this level, it will become the largest fine ever imposed by the EU on a tech company, as EU antitrust fines rarely reach this level. The Digital Markets Act also stipulates that this proportion may increase to 20% for companies that repeatedly violate regulations.
Meta spokesperson Matt Pollard said, "The European Commission's allegations are unfounded. We will continue to work constructively with regulators to demonstrate that our product innovation benefits consumers and competition." A European Union spokesman declined to comment.
As part of the official warning issued in December 2022, EU regulators accused Meta of imposing unfair trading terms that allowed it to use data from competitor online classified advertising services to provide services for its Marketplace platform. Last year, Meta tried to resolve the EU's investigation by limiting the use of rival's advertising data for Facebook Marketplace, but this concession was rejected by EU enforcement agencies.
In addition to the EU, Facebook Marketplace has also attracted the attention of other regulatory authorities, including the UK Competition and Markets Authority. Media reports indicate that the UK competition regulator has accepted similar proposals for concessions as mentioned above.