The European Commission just left Meta a lump of coal in its stocking.
On Monday, European regulators charged Meta with antitrust violations for “distorting competition in the markets for online classified ads,” including through unfair access to advertising data pulled from its competitors.
Specifically, the commission issued what’s known as a “statement of objections,” which are the preliminary findings of an investigation that the EC launched last year to look into whether Meta’s platform creates an unfair environment for its competitors.
Now that the statement of objections is out there, Meta will have a chance to reply in writing and ask for an oral hearing to present its comments on the case before EC representatives and national competition authorities.
“Concerned”
The commission believes that Meta’s own terms and conditions create an unlevel playing field for rival third-party online classified ads services that advertise on Facebook and Instagram.
EU competition regulators are “concerned” that Meta’s T&Cs authorize the company to use ads-related data derived from competitors, including other online classified ads services, for the benefit of its own classified ads platform, Facebook Marketplace. The commission called this practice “unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta’s platforms.”
The only beneficiary of that arrangement, according to the EC, is Facebook Marketplace.
Although a practice may be allowed for in T&Cs, it may or may not be used in practice. And it can be impossible to determine from the outside if data is fed into an algorithmic black box (especially if a legal document says Meta is allowed to use this data). According to a person familiar with the matter, Meta doesn’t use advertiser data from Marketplace competitors to compete against them.
Be that as it may or may not be, the commission is also accusing Meta of automatically giving all Facebook users access to Facebook Marketplace – “whether they want it or not.”
In the EC’s view, because Facebook is dominant in the social networking space and the online classified ads market, tying Marketplace to Facebook effectively distorts competition by potentially elbowing out competing marketplace services. It’s hard to fight that kind of distribution advantage.
But it’s also an alleged one-two punch.
According to the commission, Meta is both forcing people to use Facebook Marketplace and forcing other online marketplaces to share their data with Meta in a way that unfairly buoys and entrenches Meta’s own services.
“We are concerned that Meta imposed unfair trading conditions, allowing it to use data on competing online classified ad services,” Margrethe Vestager, the EU’s executive VP in charge of competition policy, said in a statement. “If confirmed, Meta’s practices would be illegal under our competition rules.”
On that note, if the commission eventually concludes that there’s sufficient evidence of infringement, Meta could face a fine of up to 10% of the company’s annual worldwide turnover, which would be somewhere in the neighborhood of $11.8 billion.
That wouldn’t break Meta’s bank, but it’s also not the sort of money one finds in one’s sofa cushions, especially while in the midst of trying to rebuild one’s advertising business as a result of Apple’s privacy changes.
According to a statement from Tim Lamb, Meta’s head of EMEA, the claims made by the EC “are without foundation,” and the company plans to “continue to work with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive.”
Bad behavior?
But when it rains, it pours.
In adjacent news earlier this month – also in Europe – EU privacy regulators ruled that Meta should not be allowed to require users to see personalized ads.
Although Meta allows people to opt out of being targeted with behavioral advertising based on data derived from other sites and apps, users don’t have the same option on Meta’s properties. As in, they can’t opt out of their Facebook, Instagram or other activity being used to target them with ads, which users agree to when they sign up.
Privacy regulators are taking issue with Meta not offering a clear opt-out and also using its terms of service – as opposed to getting an opt-in – as tacit consent for allowing targeted advertising.
Meta has the opportunity to appeal.
