Both the European Commission and the UK’s Competition and Markets Authority have opened investigations into Facebook’s online Marketplace. They want to see if Facebook gained an unfair advantage over its competitors in the online classified ad sector, by using ad data gathered from advertisers for example. The EU’s formal investigation will also see if Facebook tied its online Marketplace service to its social network, which would also be a breach of EU competition rules.
The commission said a preliminary investigation showed Facebook may be using data from competitive classified ads services that advertise on its platform in order to compete with them. Facebook could, for instance, receive precise information on user preferences from its competitors' advertisement activities and use such data to adapt its own Marketplace. This could be distorting competition.
“Facebook is used by almost 3 billion people on a monthly basis and almost 7 million firms advertise on Facebook in total. Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups. 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. In today's digital economy, data should not be used in ways that distort competition,” Margrethe Vestager, the executive VP in charge of competition policy at the EU said.
The UK’s CMA said it will look at how Facebook gathers and uses certain data for its online classified ads and online dating services, launched in Europe last year.
“We intend to thoroughly investigate Facebook’s use of data to assess whether its 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,” CMA chief executive Andrea Coscelli said. The EU will also look into the company’s online dating service.
Although the investigations will be independent, the EU and CMA will work together.
