The European Union and Britain have launched antitrust investigations into Facebook’s use of advertising data in its classified ads business — probes that could force it to change its business model on top of hefty fines.
Europe and Britain launched formal antitrust investigations into Facebook on Friday to determine if the world’s largest social network was using customer data to unfairly compete with advertisers, in a new assault on its business model, Reuters reported.
The separate moves open new fronts in Europe against one of the US tech giants, with the investigations looking at how Facebook uses its vast trove of data, including from the nearly seven million companies that advertise on Facebook’s Marketplace.
Online commerce has become ever more important during the COVID-19 pandemic and Facebook boss Mark Zuckerberg said in April that more than a billion people were visiting the buying and selling service a month.
The EU probe confirmed what a person familiar with the situation told Reuters on May 26, 2021. Facebook said the investigations were without merit.
“In today’s digital economy, data should not be used in ways that distort competition,” European Competition Commissioner Margrethe Vestager said.
She has already slapped more than 8 billion euros ($9.7 billion) in fines on Alphabet unit Google and is also investigating Amazon and Apple. The UK regulator is also examining Google and Apple.
Launched in 2016, Facebook’s Marketplace is used in 70 countries to buy and sell items and has been under EU scrutiny since 2019.
“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,” Vestager said.
The EU executive will also investigate whether Facebook ties Marketplace to the social network, giving it an advantage in reaching customers and threatening rival online classified ad services.