The European Commission suspects the social media juggernaut of having used advertising data collected from advertisers on its platforms in order to compete with them in their own markets – which would constitute an abuse of a dominant position. The CMA, the UK competition authority, has simultaneously launched its own investigation into this matter. Brussels and London have planned to collaborate within the framework of these two independent procedures.
The EU executive explained that it was looking in particular to know whether the online ad service “Facebook Marketplace” was linked to the social network, in violation of European rules. Facebook “collects a wealth of data on the activities of users of its social network and beyond, allowing it to target specific customer groups,” recalled European Competition Commissioner Margrethe Vestager. “We will examine in detail whether this data gives Facebook an unfair competitive advantage, especially in the online advertising industry,” she explained.
Data to compete with the companies … who provided them
When advertising their services on Facebook, companies that also compete directly with it in other markets can provide it with commercially valuable data. Facebook could then use that data to compete with the companies that provided it. Almost three billion people use Facebook every month, and a total of nearly seven million businesses advertise their services there, said Margrethe Vestager. However, the American giant is “in competition with companies from which it collects data” on the classifieds market, underlined the Danish commissioner. This “data cannot be used in a way that distorts competition,” she said. Facebook could, for example, obtain precise information about user preferences based on the advertising activities of its competitors and use this data to tailor Facebook Marketplace.
For its part, the CMA said it wanted to determine whether Facebook has gained “an unfair competitive advantage over its competitors in online advertising and online dating services, through the way in which it collects and uses certain data”.
No date for closing the investigation
The Commission has informed Facebook and the competition authorities of the Member States of the initiation of proceedings. No legal deadline is set for the closure of such an investigation and its duration will depend in particular on the degree of cooperation from Facebook, said Brussels.
US internet giants, such as Facebook and Google, have been the subject of several investigations for abuse of dominance, particularly in the United States and Europe. In November, Brussels accused online sales specialist Amazon of using data from independent sellers using its website to promote its own products in violation of competition rules.
The Commission has also proposed new legislation to better regulate the major internet platforms, which still have to be negotiated with the European Parliament and the Member States. At the end of October, lawsuits had been brought in the United States against Google for abuse of dominant position.
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