JUNE 4, 2021
The investigations by the European Commission, the executive arm of the 27-nation bloc, and Britain’s Competition and Markets Authority, take aim at a key business strategy used by Facebook and other large tech companies: to use their size and power in one area to enter others. Amazon took its position as the largest online retailer to become a major player in video streaming. Apple leveraged the iPhone to be one of the world’s largest mobile payments with Apple Pay. Google parlayed its dominance as a search engine into many different areas.
The regulators said they would start formal investigations of Facebook Marketplace, an eBay-like service introduced in 2016 for users to buy and sell products. Under scrutiny is whether Facebook’s cross-promotion of Marketplace to the more than two billion users of its main social network gave the company an unfair advantage over rivals in violation of European Union competition laws.
Margrethe Vestager, the European Union’s executive vice president in charge of competition policy, said Facebook collects “vast troves of data” on the activities of its users, “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,” she added, “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,” she said.
In Britain, antitrust regulators are already investigating the company’s advertising practices. On Friday, the competition regulator said it was looking at Facebook Marketplace and Facebook Dating, a service introduced in Europe last year. The British regulator said it would work with the European Commission, though the investigations are independent of each other.
“Marketplace and Dating offer people more choices and both products operate in a highly competitive environment with many large incumbents,” a representative for Facebook said. “We will continue to cooperate fully with the investigations to demonstrate that they are without merit.”
The announcements are the beginning of formal investigations that may take years to complete.