US technology giants are finding out the hard way that their usual anti-competitive stateside business practices are frowned upon on this side of the Atlantic, particularly in the Berlaymont building in Brussels, headquarters of the EU Commision.
A few months ago, X, the failing social media site formerly known as Twitter, was notified by the Commission that the latter was in breach of the Digital Services Act (DSA) in areas linked to dark patterns, advertising transparency and data access for researchers (posts passim).
This week it was the turn of Meta, the parent company of Facebook
This week the Commission announced it had fined €797.72 million for breaching EU ant-itrust rules by tying its online classified advertising service Facebook Marketplace to its personal social network Facebook and by imposing unfair trading conditions on other online classified advertising service providers.
The Commission’s investigation found that Meta is dominant in the market for personal social networks, which covers at least European Economic Area (‘EEA’), as well as having national domestic markets for online display advertising on social media.
In particular, the Commission found that Meta abused its dominant positions in breach of Article 102 of the Treaty on the Functioning of the European Union (‘TFEU’) by:
- Tying its online classified advertising service Facebook Marketplace to its personal social network Facebook. This means that all Facebook users automatically have access and get regularly exposed to Facebook Marketplace whether they want it or not. The Commission found that competitors of Facebook Marketplace may be foreclosed as the tie gives Facebook Marketplace a substantial distribution advantage which competitors cannot match; and
- Unilaterally imposing unfair trading conditions on other online classified advertising service providers who advertise on Meta’s platforms, in particular on its very popular social networks, Facebook and Instagram. This allows Meta to use ad-related data generated by other advertisers for the sole benefit of Facebook Marketplace.
The Commission has ordered Meta to bring the conduct effectively to an end and to refrain from repeating the infringement or from adopting practices with an equivalent object or effect in the future.
The fine of €797.72 million was set on the basis of the Commission’s 2006 guidelines on fines.
In setting the level of the fine, the Commission took into account the duration and severity of the infringement, as well as the turnover of Facebook Marketplace to which the infringements relate and which therefore defines the basic amount of the fine. In addition, the Commission considered Meta’s total turnover, to ensure sufficient deterrence for a company with resources as significant as Meta’s.
Margrethe Vestager, Executive Vice-President in charge of competition policy, said: ” Today we fine Meta €797.72 million for abusing its dominant positions in the markets for personal social network services and for online display advertising on social media platforms. Meta tied its online classified ads service Facebook Marketplace to its personal social network Facebook and imposed unfair trading conditions on other online classified ads service providers. It did so to benefit its own service Facebook Marketplace, thereby giving it advantages that other online classified ads service providers could not match. This is illegal under EU anti-trust rules. Meta must now stop this behaviour.”