EU, UK open first antitrust probe into Facebook in Europe

The European Commission said it will investigate whether Facebook misuses a trove of data gathered from advertisers to compete against them in classified ads.

The European Commission investigation is the first time the European Union has escalated a case regarding Facebook’s behaviour beyond the preliminary stages [File: Andrew Harrer/Bloomberg]

Facebook Inc. is facing its first in-depth probe by European regulators, the latest in a series of efforts to crack down on big tech market dominance across the continent.

The European Commission said it will investigate whether Facebook misuses a trove of data gathered from advertisers to compete against them in classified ads. It will also check if the company unfairly ties its Marketplace small ad service to the social network.

At the same time, the U.K said it was opening probes into Facebook’s Marketplace and Dating services hours after Germany’s antitrust watchdog announced a case targeting the Google News Showcase product.

The cases open up yet another front for the world’s biggest tech firms to fight on, as regulators investigate their market power during a pandemic when online commerce and advertising has become far more important to people working from home. Germany is already investigating Facebook and Amazon.com Inc. while France is examining advertising practices by Google and Apple Inc.

Opening a formal probe means regulators can start building firm evidence of antitrust violations, a process that can lead to a charge sheet, or statement of objections, and may eventually culminate in hefty fines or an order to change the way a business operates.

Shares of Facebook were up less than 1% to $328.1 at 9:47 a.m. in New York on Friday. The stock has gained about 20.2% this year.

Friday’s move by the EU is the first time it’s escalated a case into Facebook’s behavior beyond the preliminary stages. It follows other high-profile cases targeting Google, Apple Inc. and Amazon.com Inc. The EU previously fined Facebook for failing to provide correct information in the merger review of the WhatsApp takeover.

“Facebook collects vast troves of data on the activities of users of its social network and beyond,” said Margrethe Vestager, the EU’s competition chief. EU regulators “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,” she said.

Online commerce has played an increasingly important part of Facebook’s business during the pandemic as more people are buying goods online.

“Commerce ads continue to do very well and drive a meaningful amount of our overall business,” Facebook Chief Executive Officer Mark Zuckerberg said on an earnings call in April. He said more than 1 billion people now visit Facebook Marketplace each month.

Facebook “will continue to cooperate fully with the investigations to demonstrate that they are without merit,” the company said in an emailed statement. “We are always developing new and better services to meet evolving demand from people who use Facebook.

The U.K.’s antitrust regulator also opened its own probe into Facebook data, looking at both Marketplace and the dating service the company launched in Europe last year.

The Competition and Markets Authority said it planned to investigate whether Facebook abused its dominant position by collecting data from services including its single sign-on option.

The increasingly tech-focused CMA is running an independent investigation, but said it will cooperate with the EU probe. The CMA said its initial investigation including information gathering will run until Feb.

Germany’s Federal Cartel Office said Friday that it’s looking at the Google News Showcase to check if its terms offer “unreasonable conditions” to publishers. The move is latest in a series of assaults on Big Tech by Germany’s antitrust chief Andreas Mundt.

The EU investigation mirrors an earlier probe into Amazon by looking at how a so-called digital platform may use data it gathers from companies that use its service to compete against them. The EU commission has been investigating Facebook since 2019. Facebook sought to curb the probe with lawsuits last year to limit what information officials could scoop up.

Source: Bloomberg

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