The European Commission, the European Union’s executive branch, today issued a statement of objections to Meta Platforms Inc. over its business practices in the classified ad market.

Meta competes in the classified ad market with its Facebook Marketplace service. Last year, the EU opened an antitrust probe into the service to determine its impact on rivals. EU officials have now reached the preliminary conclusion that Meta’s business practices harm competitors in the classified ad market. 

The statement of objections issued to Meta today highlights two business practices that were found to have breached antitrust rules. 

Facebook users automatically receive access to Facebook Marketplace and can’t opt in or out of the service. This setting, the EU believes, may give Facebook Marketplace an unfair edge over rivals. “The tie gives Facebook Marketplace a substantial distribution advantage that competitors cannot match,” the EU stated. 

The second potential antitrust issue the EU has identified relates to Facebook’s advertising business. Companies can promote services that compete with Facebook Marketplace by running ads on Meta’s platforms. Meta’s terms of service allow it to collect data about such competitors’ ad campaigns and use the data to benefit Facebook Marketplace.

The EU is concerned that this practice is “unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta’s platforms.”

“Our preliminary concern is that Meta ties its dominant social network Facebook to its online classified ad services called Facebook Marketplace,” said European Commission Executive Vice President Margrethe Vestager. “This means Facebook users have no choice but to have access to Facebook Marketplace. Furthermore, we are concerned that Meta imposed unfair trading conditions, allowing it to use data on competing online classified ad services.”

If the EU’s investigation determines that Meta engaged in anticompetitive behavior, the company may be required to change the business practices found to have breached antitrust rules. Antitrust investigations can also lead to a fine equal to as much as 10% of a company’s worldwide annual revenue. Last year, Meta generated $117.9 billion in sales.

“The claims made by the European Commission are without foundation,” Tim Lamb, Meta’s head of competition for Europe, the Middle East and Africa, said in a statement to Politico. “We will continue to work with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive.”

In conjunction with the release of the antitrust charges over Facebook Marketplace, the EU today announced that it has closed a separate probe into Meta’s “Jedi Blue” agreement with Google LLC. The agreement focused on the terms of the companies’ collaboration in the advertising market.

Meta has also faced antitrust scrutiny over its acquisition strategy. The U.K.’s antitrust regulator, the Competition and Markets Authority, recently ordered the company to unwind its acquisition of Giphy Inc. after determining that the deal was anticompetitive. Earlier, the U.S. Federal Trade Commission filed a lawsuit to block Meta from completing its proposed purchase of virtual reality company Within Unlimited Inc. for $400 million.  

Photo: Nokia621/Wikimedia Commons