New Delhi: EU antitrust regulators have opened an investigation into Facebook’s marketplace. The social network will be probed to find out if it flouts any rules of the European Union by using advertisers’ data to compete with them in classified ads.
The investigation has been announced after rivals complained to authorities accusing Facebook of using advertiser data.
Responding to the development, Facebook said that it will cooperate fully with both the EU and UK investigations “to demonstrate that they are without merit”, Reuters reported.
Facebook added that its “Marketplace and dating offer people more choices, both products operate in a highly competitive environment with many large incumbents”.
Facebook’s online marketplace was launched in 2016 and is currently used by 800 million users across 70 countries to buy and sell items. Its scrutiny began in 2019 when European Commission sent out questionnaires to know about its role as opposed to rivals in online classified ads, Reuters cited an EU document as revealing.
During that period, companies were asked if they see Facebook Marketplace as a close rival in online classified ads services. They were also asked about the number of visits on their platforms when ads placed on Facebook’s site.
People familiar with the issue told Reuters that competitors involved in classified ads complained that the social media giant was using its market power to give it an unfair competitive advantage.
The extensive investigation initiated now could take years before regulators reach a conclusion. If Facebook is found guilty it could be liable to pay a fine of as much as 10 percent of global turnover along with the order to stop anti-competitive practices.
In a second separate case, the Commission is also looking into how Facebook collects and monetizes its data.
EU Regulators’ Action Against Google
Before this, several digital giants have face allegations of indulging in anti-competitive practices. Notably, in October last year, the US Department of Justice and 11 state Attorney-Generals filed a lawsuit against Google accusing the search giant of maintaining a monopoly in general search services.
The US Department of Justice had reminded about how it sued Microsoft in 1998 to be able to create an even playing field for competitors like Google who have in turn become anti-competitive themselves.
In its official statement, the US Department of Justice wrote, “Google no longer competes only on the merits but instead uses its monopoly power – and billions in monopoly profits – to lock up key pathways to search on mobile phones, browsers, and next-generation devices, depriving rivals of distribution and scale. The end result is that no one can feasibly challenge Google’s dominance in search and search advertising”.
The EU antitrust regulators had in 2019, fined Google’s parent company Alphabet to the tune of $1.7 billion for unfairly restricting rivals from putting up ads on its platform through third parties using its AdSense tool. Google was also fined a massive $5 billion by European antitrust authorities in 2018.