Representatives from the EU Commission and UK Regulatory body have expressed concerns regarding Facebook’s Marketplace distorting competition for classified ads. Both parties will probe Facebook to determine whether or not the social media platform has used advertising and user data to monopolise the classified ads market. The governing bodies will work with each other as part of a generalised, joint investigative probe.

The parallel Facebook investigations come as the UK prepares for legislation that will officially launch a new technology regulator within the CMA. The Digital Markets Unit will set bespoke codes of conduct for large technology companies that will be enforceable via hefty fines. The unit launched in shadow form in April, though it may face a long wait to be granted powers.

Both regulators said they intended to work closely with each other on the Facebook probes, which were first reported by the Financial Times. Andrea Coscelli, the CMA’s chief executive, said:

‘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. Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice. We will be working closely with the European Commission as we each investigate these issues, as well as continuing our co-ordination with other agencies to tackle these global issues.’

Margrethe Vestager, Head of Competition for the European Commission, added:

‘Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups. 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’

Unfair Advantage over Rivals

The EU Commission has long found issue with Facebook’s use of customer and user data. Previous investigations revealed Facebook’s use of data from rival classified ads services that advertise on its platform to compete with them. The Commission and UK’s Competition and Markets Authority (CMA) will now carry out in-depth formal investigations to assess these concerns.

In addition to concerns about Facebook Marketplace and classified ads, the UK’s CMA will also probe Facebook’s dating service on similar grounds. In a statement, a spokesperson from Facebook said it believes the allegations are ‘without merit’, adding that both Facebook Marketplace and Facebook Dating are part of ‘highly competitive’ markets:

‘We are always developing new and better services to meet evolving demand from people who use Facebook. Marketplace and Dating offer people more choices and both products operate in a highly competitive environment with many large incumbents. We will continue to cooperate fully with the investigations to demonstrate that they are without merit’

The European Commission has been scrutinising Facebook Marketplace for years. Reuters notes that European officials sent out questionnaires about the service back in 2019, only for Facebook to push back against the investigation the following year, arguing that the scale of the EU’s document request meant it would have to hand over unrelated, yet highly sensitive information.

Facebook’s History of Data Intrigue
Facebook’s Marketplace service allows people to buy and sell items from locals. It’s now used by 800 million Facebook users across 70 countries. Several rival platforms have reportedly complained that Facebook gives itself an unfair advantage by being able to advertise Marketplace for free to its 2 billion users.

This is the first time Facebook has been formally investigated by the EU. The Commission has similarly spearheaded anti-competitive investigations by the bloc into the likes of Apple, Google, Amazon, and Microsoft. Earlier this year, the EU formally accused Apple of violating antitrust rules with its App Store policies, and last November the commission said Amazon was misusing the data it collects from third-party marketplace sellers.