Would Meta abuse its dominant position against Leboncoin and Vinted? The European Commission has informed Meta as part of a preliminary investigation that it believes the company breached EU antitrust rules by distorting competition in online classifieds markets. This concerns the Facebook Marketplace service which competes with Leboncoin-type classified ads where users can buy and sell goods.
Facebook’s classified ads are boosted by the power of the social network
The Commission does not appreciate that Meta links its online classifieds service, Facebook Marketplace, to its personal social network, Facebook. It is also concerned that Meta is imposing unfair trading conditions on Facebook Marketplace competitors for its own benefit. The Commission considers that Meta occupies a dominant position in the market for personal social networks in Europe and in the national markets for online display advertising on social networks.
” With its Facebook social network, Meta reaches billions of monthly users and millions of active advertisers worldwide points out Margrethe Vestager, Deputy Director General in charge of competition policy. ” Our concern is that Meta is tying its dominant social network Facebook to its online classifieds services called Facebook Marketplace she continues.
Unfair advertising terms for competing classifieds services
” This means that Facebook users have no choice but to have access to Facebook Marketplace. Additionally, we are concerned that Meta has imposed unfair terms of trade, allowing it to use data on competing online classifieds services. If confirmed, Meta’s practices would be illegal under our competition rules she announces.
At this preliminary stage, the Commission believes that Meta abused its dominant position in two ways. First, Meta combines its classifieds service with its Facebook social network. This means that Facebook users automatically have access to Facebook Marketplace, whether they want it or not. Therefore, the Commission is concerned that competitors of Facebook Marketplace will be squeezed out, as this gives Facebook Marketplace a distribution advantage that its competitors cannot match.
Meta would use the advertising data of its competitors in the classifieds
Second, according to the Commission, Meta imposes unfair trading conditions on competing classifieds services that advertise on Facebook or Instagram. The Commission is concerned that the terms and conditions, which allow Meta to use advertising data from competitors for the benefit of Facebook Marketplace, are unjustified, disproportionate and unnecessary for the provision of online display advertising services on Meta’s platforms. Such terms place a burden on competitors and only benefit Facebook Marketplace.
The European Commission is only at the preliminary stage. The practices she criticizes, if confirmed, would violate Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) which prohibits the abuse of a dominant market position.
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