The European Commission has opened a formal antitrust investigation of Facebook’s use of advertising data. The investigation is to see if the company is violating EU rules by using advertising data from advertisers to compete with them in classified ads.
“Following a preliminary investigation, the Commission has concerns that Facebook may distort competition for the online classified ads services”, the Commission said.
Facebook said it will cooperate fully and that accusations “are without merit”.
The Commission said the formal investigation will also assess whether Facebook ties its online classified ads service “Facebook Marketplace” to its social network, in breach of EU competition rules.
Executive Vice-President Margrethe Vestager said: 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.”
3 bn people a month & almost 7 mio firms advertising – on @Facebook in total. Based on enormous of data @Facebook target ads to specific customer groups. We will look in detail if this gives Facebook an undue competitive advantage in classified ads https://t.co/S1Rctljcam
— Margrethe Vestager (@vestager) June 4, 2021
“As part of its in-depth investigation, the Commission will examine in detail whether Facebook’s position in social networks and online advertising allows it to harm competition in neighbouring markets, where Facebook is also active thanks to its social network, and in particular in online classified ads”, the Commission said in a statement.
“When advertising their services on Facebook, companies, which also compete directly with Facebook, may provide it commercially valuable data. Facebook might then use this data in order to compete against the companies which provided it.”
This applies in particular to online classified ads providers, the platforms on which many European consumers buy and sell products. Online classified ads providers advertise their services on Facebook’s social network. At the same time, they compete with Facebook’s own online classified ads service, “Facebook Marketplace”.
“Following a preliminary investigation, the Commission has concerns that Facebook may distort competition for the online classified ads services. In particular, Facebook might make use of the data obtained from competing providers in the context of their advertising on Facebook’s social network, to help Facebook Marketplace outcompete them.”
“Facebook could, for instance, receive precise information on users’ preferences from its competitors’ advertisement activities and use such data in order to adapt Facebook Marketplace”, the Commission said.