Meta Platforms Inc., the parent company of Facebook, is expected to receive its first European Union (EU) antitrust fine in the coming weeks. This development follows an extensive investigation by the European Commission into Meta’s business practices related to its classified ads service, Facebook Marketplace.
Unfair Advantage through Bundling
The European Commission’s investigation, which began over a year and a half ago, has concluded that Meta unfairly promotes Facebook Marketplace by bundling it with its main social network platform. This practice gives Marketplace a substantial distribution advantage that its competitors cannot match. Users are automatically given access to Marketplace without an option to opt out, which the Commission argues creates an unfair edge for Facebook Marketplace.
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Abuse of Dominant Market Position
In addition to the bundling issue, the Commission has accused Meta of exploiting its dominant position by imposing unfair trading conditions on competing classified ads services. These services advertise on Facebook and Instagram, but Meta’s terms of service allow it to collect data from these ad campaigns and use the information to benefit Marketplace. This practice, if confirmed, would infringe Article 102 of the Treaty on the Functioning of the European Union, which prohibits the abuse of a dominant market position.
Potential Financial Penalties
Meta could face a fine of up to $13.4 billion, equivalent to 10% of its 2023 global revenue. However, fines of this magnitude are rare, and the final penalty is expected to be lower. The decision is anticipated to be made in September or October, ahead of EU antitrust chief Margrethe Vestager’s departure in November. The timing, however, remains flexible and could be subject to change.
Meta’s Response
Meta has disputed the European Commission’s claims. A spokesperson reiterated that the allegations are without foundation and that Meta’s product innovations benefit consumers and foster competition. Last year, Meta attempted to resolve the issue by proposing to limit the use of competitors’ advertising data for Facebook Marketplace, but the EU rejected this concession. Interestingly, similar proposals were accepted by UK regulators.
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The anticipated fine would mark Meta’s first antitrust penalty within the EU, but it may not be the last. Meta is currently facing multiple investigations, including a recent charge by the European Commission for allegedly failing to comply with the EU’s Digital Markets Act. The Commission argues that Meta’s new pay-or-consent advertising model, introduced in November, does not provide users with a “less personalized but equivalent version” of its platforms and fails to ensure users’ right to freely consent to data collection.