The European Commission has formed a “preliminary view” that Meta Platforms has breached EU antitrust law by manipulating competition in the online classified advertising markets on Facebook and Instagram. The Commission took particular umbrage with the bundling of Meta’s Facebook with access to Facebook Marketplace, which allows users to buy and sell items. Meta could face a fine as high as $11.8 billion if the allegations of self-dealing prove true. The Commission also claims Meta is imposing unfair conditions on Marketplace competitors for its own benefit.

Through Facebook, “Meta reaches globally billions of monthly users and millions of active advertisers” said Commission executive VP in charge of competition policy Margrethe Vestager in a statement, making a case that offering an integrated classified-ad service with Facebook means “Facebook users have no choice but to have access to Facebook Marketplace.” The Treaty on the Functioning of the European Union (TFEU) prohibits abuse of a dominant market position.

Meta denies the Commission’s charges, claiming “Facebook users that automatically get access to Marketplace are free to decide if they want to use it,” according to The Wall Street Journal, which further characterized the social giant’s position as providing “an alternative to large and established e-commerce advertisers such as Amazon.com,” adding that Meta says it doesn’t leverage data from classified-ad service competitors.

“We will continue to work with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive,” Tim Lamb, head of competition for Meta in Europe, the Middle East and Africa, said in WSJ. Meta will have the opportunity to offer a defense before the Commission makes a final decision.

The charges are the latest in a wave of antitrust enforcement in Europe and around the globe. The EU brought charges against Apple last year, claiming it was using its market clout in music to disadvantage competitors including Spotify. It is also investigating allegations that Google abuses its dominant role in digital advertising.

WSJ says “the European Commission has been investigating Meta for years on multiple fronts.” In March, the UK’s Competition and Markets Authority “separately opened its investigation into whether Meta repurposes the data it gathers from advertisers who buy ads to benefit its own services, including both its marketplace and its dating service,” WSJ wrote of the ongoing case.

If the Commission ultimately finds evidence confirming violation of EU law, the subject company “can face potential changes to its business practices or a fine of up to 10 percent of global annual revenue,” says CNBC, noting “for Meta, which made $117.92 billion in annual revenues in 2021, that could mean a penalty worth as much as $11.8 billion.”

Related:
Europe’s New Tech Regulations Leave Open a Big Question: How Will They Work?, The Wall Street Journal, 12/6/22