Marketplace, how much Meta risks in Europe for abuse of dominant position
For the EU Commission, Meta violated antitrust rules on advertising with "abuse of a dominant position" by tying its online classifieds service Facebook Marketplace with its personal social network Facebook
Meta, owner of Facebook and Instagram, is accused of EU competition violations on the online classifieds market.
The European Commission has informed the social giant founded by Mark Zuckerberg of its preliminary opinion that the company has violated EU antitrust rules by distorting competition in online advertising markets. Specifically, the EU executive contests the fact that Meta links its online classifieds service, Facebook Marketplace, to its personal social network, Facebook. Rivals in the online ad market do not benefit from such access to Facebook users and their data, and the link could constitute an abuse of Facebook's dominant position in the social media market.
Furthermore, the Commission is concerned that Meta is imposing unfair trading terms on Facebook Marketplace competitors for its own benefit.
The Commission said this was "unjustified, disproportionate and unnecessary" when Meta provides its online display ad services. These conditions are a burden to competitors and only benefit Facebook Marketplace, the EU executive branch said. "Let's think of eBay, which cannot count on the driving force of a social network such as Facebook" Repubblica points out.
If confirmed, these practices would violate Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) which prohibits the abuse of a dominant position.
The EU first launched a formal investigation into competition from the Facebook Marketplace in June 2021. The preliminary opinion, according to which the US company distorted competition from online marketplaces, has already been served on Meta.
All the details.
THE OPINION OF THE EUROPEAN COMMISSION ON VIOLATION OF ANTITRUST RULES
According to the European Commission's preliminary opinion, Meta has violated EU antitrust rules by distorting competition in online advertising markets and abusing its dominant position that would have allowed it to impose unfair trading conditions on Facebook Marketplace competitors.
In its assessment, the EU Commission considers Meta to be dominant in the personal social network market, which extends across Europe, as well as in national markets for online display advertising on social media. The US company allegedly abused its market dominance by tying its Facebook Marketplace online ad service with its personal social network Facebook. This way, Facebook users would automatically have access to Facebook Marketplace, whether they want to or not. The Commission is concerned that commercial competitors could be foreclosed from the service, as the tie gives Facebook Marketplace a substantial distribution advantage, which competitors cannot exploit.
AT THE DEFICIENCY OF THE COMPETITORS
Second, Mark Zuckerberg's company would unilaterally impose unfair trading terms on competing online ad services that advertise on Facebook or Instagram. In the communicated opinion, the EU executive fears that the terms and conditions which authorize Meta to use competitor ad data for the benefit of Facebook Marketplace are unjustified, disproportionate and unnecessary for the provision of online advertising services on the platforms. of Meta. Such terms would impose a burden on competitors that would benefit Facebook Marketplace only.
ALLEGED VIOLATION OF ART. 102 OF THE TFEU
If confirmed, these practices would violate Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits the abuse of a dominant position on the market. Sending a Statement of Objections does not prejudge the outcome of the investigation.
RISK BILLION FINE
Meta is now authorized to examine the documents, respond in writing and request an oral hearing to present its observations, according to the Commission. The Commission will then take a final decision on the company's alleged abuse of its dominant position. If the infringement of competition is confirmed, Facebook could face a fine of up to 10% of its turnover on the European market. For Meta, which made annual revenues of $117.92 billion in 2021, that could mean a fine of up to $11.8 billion, CNBC quantifies.
THE REPLICA OF META
The company returned the allegations to the sender. “The claims of the European Commission are baseless. We will continue to work with the regulatory authorities to demonstrate that the innovation of our products is beneficial to consumers and competition”: this is the comment of Tim Lamb, head of competition EMEA of Meta, after the preliminary opinion of Brussels according to which the company violated EU antitrust rules by distorting competition in online advertising markets.
FIRST TIME FACEBOOK RECEIVES DOMINANT POSITION ACCUSATION
Finally, for the Meta group it is the first time that the EU has accused it of abusing its dominant position. As Politico recalls, the company was handed a €110 million fine by the EU five years ago for failing to provide correct information during the EU's review of the merger to acquire WhatsApp. In 2017 , German antitrust regulators found its data collection practices abusive and ordered Facebook to stop tracking users outside its social network, a case that is still being debated in court. A separate EU investigation into Meta's 2018 "Jedi Blue" pact with Google has been closed.
Any EU sanction would be the latest setback for Meta, which is facing investor pressure on its pivot to the "metaverse," among other things. The company's stock price is down more than 60% this year due to a broader crash in tech stocks.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/marketplace-quanto-rischia-meta-in-europa-per-abuso-di-posizione-dominante/ on Tue, 20 Dec 2022 10:03:33 +0000.