Facebook Antitrust Probes: UK and EU Investigate Ad Data Use

Facebook Under Increased Antitrust Scrutiny in Europe

Facebook is currently the subject of two new antitrust investigations initiated in Europe.

Both the U.K.’s Competition and Markets Authority (CMA) and the European Commission’s Competition Commission have announced formal investigations into the social media company’s business practices, appearing to be a deliberately synchronized action.

Focus of the Investigations

The regulatory bodies will be examining how Facebook utilizes data obtained from advertising clients and users of its single sign-on functionality.

A key concern is whether this data is leveraged unfairly to disadvantage competitors, particularly within markets like online classified advertisements.

The investigations will proceed independently, but with a commitment to close collaboration and information sharing between the U.K. and the EU.

Post-Brexit Regulatory Freedom

Following the U.K.’s departure from the European Union, the CMA possesses greater autonomy to pursue investigations that may parallel or intersect with ongoing EU antitrust probes.

The initial focus of both investigations appears similar, centering on Facebook’s handling of advertising data, though differing outcomes are still possible.

This dual regulatory pressure presents a heightened level of scrutiny for Facebook, potentially leading to joint analysis of responses and increased competition between the investigating agencies.

CMA’s Concerns Regarding Competitive Advantage

The CMA is investigating whether Facebook has secured an unfair advantage over competitors in the online classified ads and online dating sectors through its data collection and usage practices.

The regulator specifically expressed concern that Facebook might be exploiting data to gain an edge in these markets.

Facebook itself operates within both of these spaces, through Facebook Marketplace and Facebook Dating.

Andrea Coscelli, CEO of the CMA, stated the intention to thoroughly assess Facebook’s data usage to determine if it’s creating an unfair advantage.

He emphasized that such an advantage could hinder the success of competing firms, especially smaller businesses, and ultimately limit consumer choice.

European Commission’s Investigation

The European Commission’s investigation will assess whether Facebook has violated EU competition rules by utilizing advertising data to compete with advertisers.

Classified advertisements are identified as a key market of concern in this probe.

The EU investigation also examines whether Facebook is illegally tying its online classified ads service to its social network, potentially breaching competition regulations.

Germany’s competition authority initiated a similar investigation into Facebook’s tying of Oculus to Facebook account usage late last year, adding to the company’s European legal challenges.

Data Usage and Market Distortion

The Commission highlighted that advertisers providing data to Facebook may be directly competing with the platform.

Facebook could potentially use this commercially valuable data to compete against the very companies that supplied it.

This is particularly relevant for online classified ads providers who advertise on Facebook and simultaneously compete with Facebook Marketplace.

A preliminary investigation by the Commission suggests that Facebook may be distorting the online classified ads market, prompting a more in-depth review.

Vestager’s Statement on Data and Competition

Margrethe Vestager, EVP and head of competition policy for the EU, emphasized the scale of Facebook’s user base and advertising revenue.

She noted that Facebook collects extensive data on user activities, enabling targeted advertising.

Vestager stated that the investigation will determine if this data provides Facebook with an undue competitive advantage, particularly in the online classified ads sector.

She underscored that data should not be used in ways that undermine fair competition in the digital economy.

Facebook’s Response

Facebook provided the following statement in response to the European antitrust probes:

[Statement from Facebook would be inserted here]

A Shift in EU Scrutiny

Historically, the European Commission’s competition authority has focused more on other tech giants like Google and Amazon.

However, this formal investigation marks a significant shift, bringing Facebook under increased scrutiny.

The EU’s informal investigation into Facebook Marketplace had been ongoing since March 2019.

CMA’s Broader Regulatory Reforms

The CMA is also developing broader pro-competition regulatory reforms targeting tech giants like Facebook and Google.

These reforms aim to curb the power of the adtech duopoly in the U.K.