Facebook has been hit with a double whammy after the United Kingdom and European Commission both launched independent antitrust investigations into it.
Both are examining whether the social networking giant’s use of customer data gives it an unfair advantage in online advertising. And both regulators said they will work together on the probe.
Facebook is already facing antitrust lawsuits on the other side of the pond in the United States. In December last year both the Federal Trade Commission (FTC) and a coalition of attorneys general from 48 states and territories launched two lawsuits against the firm.
Facebook was accused in the United States of alleged anti-competitive conduct by buying up rivals and stifling competition. It faces a significant risk of having to divest itself of Instagram and WhatsApp if it loses.
And now the UK and Europe have also begun antitrust investigations, but this time centred over Facebook’s control of online advertising.
The UK’s Competition Market Authority (CMA) on Friday announced that “investigating whether Facebook might be abusing a dominant position in the social media or digital advertising markets through its collection and use of advertising data.”
Essentially, the CMA is investigating whether Facebook has gained an unfair advantage over competitors in providing services for online classified ads and online dating, through how it gathers and uses certain data.”
It pointed out that Facebook collects data from its digital advertising services, which allow other businesses to advertise to Facebook users, and from its single sign-on option, Facebook Login, which offers people the ability to sign into other websites, apps and services using their Facebook log-in details.
The CMA is concerned that Facebook may have “unfairly used the data gained from its advertising and single sign-on to benefit its own services, in particular Facebook Marketplace – where users and businesses can put up classified ads to sell items – and Facebook Dating – a dating profile service it launched in Europe in 2020.”
“We intend to thoroughly investigate Facebook’s use of data to assess whether its business practices are giving it an unfair advantage in the online dating and classified ad sectors,” said Andrea Coscelli, chief executive of the CMA.
“Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice,” said Coscelli.
“We will be working closely with the European Commission as we each investigate these issues, as well as continuing our coordination with other agencies to tackle these global issues,” she added.
The European Commission also on Friday announced its formal antitrust investigation into Facebook’s use of data.
It will assess whether Facebook violated EU competition rules by using advertising data gathered in particular from advertisers in order to compete with them in markets where Facebook is active such as classified ads.
“Facebook is used by almost 3 billion people on a monthly basis and almost 7 million firms advertise on Facebook in total,” noted executive VP Margrethe Vestager, in charge of competition policy.
“Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups,” said Vestager.
“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,” she added. “In today’s digital economy, data should not be used in ways that distort competition.”
And the EC confirmed it would work closely with the UK’s CMA.
“The UK’s Competition and Markets Authority (CMA) has today also launched its own investigation into Facebook’s use of data.,” said the EC. “The European Commission will seek to work closely with the CMA as the independent investigations develop.”
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