Meta has copped another big fine in Europe, with the company being asked to pay €797.72 million ($US841 million) in penalties over breaches of EU antitrust rules related to the linking of Facebook Marketplace to Facebook, and the market advantages that provides for Facebook’s user-listed market service.
Back in 2022, the EU Commission alleged that Facebook was breaching local antitrust regulations by “distorting competition in markets for online classified ads” and abusing its dominant position.
The Commission’s view was that Facebook was using the scale of its social network to give Facebook Marketplace an unfair advantage over other online classifieds providers, because Facebook users were being given access to Marketplace whether they want it or not. The Commission also suggested that Meta had imposed unfair trading conditions on competing online classified ads services that advertise on Facebook or Instagram.
The investigation has now come to a head, with EU officials announcing the massive fine, which could actually have been a lot higher, based on EU rules.
As per the EU Commission:
“The Commission's investigation found that Meta is dominant in the market for personal social networks, which is at least European Economic Area (‘EEA') wide, as well as in the national markets for online display advertising on social media.”
Based on this reach, Facebook has been deemed to have a significant market advantage, which has enabled it to quash competitors, while also restricting their ad reach.
“In setting the level of the fine, the Commission took into account the duration and gravity of the infringement, as well as the turnover of Facebook Marketplace to which the infringements relate and which therefore defines the basic amount of the fine. In addition, the Commission considered Meta's total turnover, to ensure sufficient deterrence for a company with resources as significant as Meta's.”
Meta has vowed to appeal the decision, while also explaining that online marketplaces not organized by Facebook directly had been in operation long before it brought Marketplace to the region.
“When Facebook Marketplace first launched globally in 2016, people in the European Economic Area had organically created more than 400,000 groups focused on buying, selling or promoting goods on Facebook.”
Meta has also argued that local marketplaces are thriving, despite the presence of Marketplace, and that the EU’s case is built on potential impacts that haven’t happened as yet.
“EU competition law is intended to protect the competitive process and consumers, not to preserve the established business positions of incumbent providers in the face of innovation.”
Meta does seem to have a point, and it’ll be interesting to see whether the EU case holds up to a challenge, and what that means for other providers in the region.
EU regulators have been keen to squeeze the social media giants, to ensure that they comply with increasingly restrictive rules around consumer protection. Some of those investigations have felt like overreach, and the Commission stamping its authority to showcase their powers, and it does seem like there may be room for appeal in this case.
For now, however, Meta will need to comply with the findings, and seek to address the Commission’s concerns. Which could see Marketplace pulled from EU regions, depending on how they address each element.
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