The European Commission imposed a fine of almost 800 million euros on Meta for having transformed Facebook into a commercial platform through strategies considered anti-competitive. The decision comes after two years of investigations and could redesign the way technology giants integrate new services into their platforms. The Competition Commissioner, Margrethe Vestager, says that the fine against Meta was applied for its advertising service on Facebook Marketplace, which harms traditional competitors through advantageous mechanisms.
Meta must immediately put an end to the questioned practices: it will have to separate the Marketplace service from the Facebook platform, avoiding automatic integration, and modify the conditions of use of competitors’ advertising data. Brussels also asked the company to refrain from similar practices in the future. For its part, Meta has stated that it will respond to the requests while it proceeds with the appeal, promising to “work quickly and constructively to implement a solution that addresses the points raised.”
What is Marketplace?
Facebook Marketplace represents one of Meta’s most strategic moves in commerce on-line. When Meta launched Marketplace globally in 2016, it did so to give an official structure to something that already existed on the platform: Facebook users had already spontaneously created more than 400,000 groups dedicated to the buying and selling of objects. For this reason, Meta created a dedicated and integrated service to “respond” to the need that users were already satisfying in an unstructured way through groups.
Today, the service allows billions of users to buy and sell items for freefrom furniture, electronics, to cars or real estate, directly within the social network. The company has transformed what was an informal practice of users into a structured business, devising a digital market that competes with specialized platforms. According to the Commission, this move unbalanced a European online advertising market worth tens of billions of euros.
Antitrust objections
The Commission detected two serious breaches of competition rules. The first refers to the automatic integration of Marketplace into Facebook. As Commissioner Vestager points out, Meta tied the ad service to the platform, creating what Brussels calls a “substantial distribution advantage that competitors cannot match.” In practice, every time a user connects to Facebook, they encounter the buying and selling space, whether they want it or not. This means that Meta exploits its enormous social user base to give its advertising service visibility that no competitor can achieve, even by paying for it.
The second violation concerns the use of data. In accordance with what was ruled by Brussels, Meta imposed unfair commercial conditions on other advertising service providers who publish on their platforms. In this way, the company can use the information generated by its competitors’ ads “for the exclusive benefit of Facebook Marketplace”, further strengthening its dominant position in the sector. In essence, the giant can study the advertising strategies of its competitors and use this information to improve its own service.
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The defense of Meta
The American company firmly rejects the accusations and announces a legal battle. According to Meta, the Commission’s decision completely ignores the reality of the European online advertising market. In its official statement, the company emphasizes that Marketplace was created in response to a need that was already present: “before the global launch in 2016, users in the European Economic Area (EEA) had organically created more than 400,000 groups dedicated to buying and selling. “. Meta rejects the idea that it is forcing the service on users and maintains that the Commission’s decision will end up harming consumers. He maintains that Marketplace has innovated the sector by offering a free service integrated into the social network, while traditional sales spaces usually charge commissions and have separate platforms. Meta emphasizes that separating Marketplace from Facebook would mean protecting the business model of historical competitors instead of rewarding innovation.
In support of his argument, he cites the vitality of the current market. It lists platforms such as eBay, Leboncoin in France, Marktplaats in the Netherlands, Subito in Italy, Blocket in Sweden and Finn.no in Norway as “formidable competitors and market leaders in many Member States.” Meta also highlights the success of new operators such as Vinted, arguing that this demonstrates how their service has not hindered competition, but has instead stimulated innovation in the sector.
Brussels’ decision could have repercussions far beyond this specific case. The online advertising market in Europe moves tens of billions of euros and has the presence of traditional operators that have had to face the aggressive entry of Meta. The Commission not only evaluated the magnitude of the damage to competition, but also the company’s overall turnover, to establish a sanction that could have a decisive effect.
Article originally published in WIRED Italy. Adapted by Alondra Flores.
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