It’s been a tough week over at Meta HQ, as the European Commission has slapped the tech giant with another fine for tying Facebook Marketplace, its classified-ad service, to Facebook and using non-public advertising data.
Authorities are demanding €797.72 million for Meta, which is essentially giving Marketplace an unfair advantage over competing digital storefronts. Marketplace was set up in 2016 as a way for individuals to buy and sell items over social media, typically furniture.
EU says Meta violates antitrust laws, restricts competition
The Commission has two main problems. The first is that “all Facebook users automatically have access and get regularly exposed to Facebook Marketplace whether they want it or not,” and competitors cannot reach the same level of exposure.
The second is that competitors must consent to Meta using their data if they want to advertise on Facebook or Instagram. This data could benefit Marketplace, and the Commission says that requiring it is “unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta’s platforms.”
The U.K.’s Competition and Markets Authority has also questioned Meta’s data practices, arguing that they might give Meta an undue competitive advantage. However, the authority ended its investigation after Meta agreed to limit its use of advertising data and allow advertisers to opt out of their data being used.
Margrethe Vestager, the outgoing European Commissioner for Competition, said that these practices provide Meta with “advantages that other online classified ads service providers could not match.”
“This is illegal under EU antitrust rules. Meta must now stop this behaviour,” she said in the press release.
SEE: Apple’s Geo-Blocking Practices Could Violate EU Rules
Meta’s ownership of Facebook and Instagram makes it dominant in the markets of social media and digital advertising on social media. While this is not illegal in itself, it gives it a responsibility to not abuse its position by restricting competition in these two markets, according to European law.
The Commission first opened proceedings into Meta’s possible anticompetitive conduct in June 2021 and issued initial charges via a Statement of Objections in December 2022.
The fine was calculated by considering the duration and gravity of the infringement, as well as Meta and Marketplace’s respective turnovers. When paid, the money will go towards the general E.U. budget, reducing Member States’ contributions the following year and the burden on taxpayers.
Meta to appeal fine, denies Marketplace and ad data claims
Meta immediately responded to the Commission’s announcement, saying it would appeal the fine. Mark Zuckerberg’s company says the authority “ignores the fact that Facebook users can choose whether or not to engage with Marketplace” and that it doesn’t use competitors’ data to benefit Marketplace, having “built systems and controls to ensure that.”
It added that the Commission “provides no evidence of competitive harm to rivals or any harm to consumers,” using eBay, Leboncoin, and Marktplaats as examples of rivals that still achieve success. Regardless, Meta pointed out that E.U. competition law does not “preserve the established business positions of incumbent providers in the face of innovation.”
Meta also referenced a September report by former European Central Bank President Mario Draghi that called for an overhaul to enhance the region’s competitiveness and innovation, arguing that the fine contradicts those goals. The tech giant cited this report again a few days ago after conceding to regulators regarding its advertising practices.
The EU’s ongoing pursuit of Meta’s advertising practices
Vestager has long had Meta and rivals such as Apple, Google, and Amazon in her crosshairs. The name of the game is to protect E.U. citizens’ digital autonomy and hold tech giants accountable for their data collection and privacy practices.
Much of Meta’s revenue comes directly from the clicks and engagement targeted ads on Facebook and Instagram generate. Thus, losing a segment of user data as big as the E.U.’s 27-nation population could harm their continued growth, so Meta has a financial interest in conceding with the E.U.’s demands. In the third quarter of this year, 23.5% of its advertising revenue was generated by European users.
Meta is currently challenging the Commission for including Marketplace and Messenger on the list of core platform services that must comply with the DMA’s requirements, as they provide “an important gateway for business users to reach end users,
A company spokesperson told The Verge that Marketplace shouldn’t qualify because it’s a consumer-to-consumer service, and Meta does not sit in the middle. Compliance with the DMA means Meta will have to follow rules on data sharing and interoperability, which could impact its competitive edge.
Meta was also fined €110 million by the Commission in 2017 for providing misleading information during its acquisition of WhatsApp three years prior. The company had assured regulators it couldn’t automatically link user accounts between the two platforms but later introduced features that do so.
SEE: EU’s AI Act: Europe’s New Rules for Artificial Intelligence
Over the years, Europe’s Data Protection Commission has fined Meta several times for violating GDPR rules based on its targeted advertising practices. In addition to the DMA and GDPR, Meta must comply with the Digital Services Act, a set of rules designed to regulate how designated “Very Large Online Platforms” handle privacy, protect their users, and operate transparently.
But it’s not just advertising data that Meta and the E.U. are warring over. In June, Meta delayed the training of its large language models on public content shared on Facebook and Instagram in Europe after regulators suggested it might need to get the consent of the content’s owners. Meta AI, its frontier AI assistant, has still not been released within the bloc due to its “unpredictable” regulations.
Representatives from Meta, along with Spotify, SAP, Ericsson, Klarna, and more, signed an open letter in September to Europe expressing their concerns about “inconsistent regulatory decision-making.” The letter says that interventions from the European Data Protection Authorities have created uncertainty about what data they can use to train their AI models.
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