EU fines Meta almost €800 million via Facebook Marketplace

It’s been a tough week at Meta’s headquarters, as the European Commission has again fined the tech giant for linking Facebook Marketplace, its advertising service, to Facebook and using non-public advertising data.

The authorities are demanding €797.72 million for Meta, essentially giving Marketplace an unfair advantage over rival digital stores. Marketplace was founded in 2016 as a way for individuals to buy and sell items via social media, mostly furniture.

The EU says Meta violates antitrust laws and restricts competition

The Commission has two main problems. The first is that “all Facebook users automatically have access to and are regularly exposed to Facebook Marketplace, whether they want to or not,” and competitors cannot achieve 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 requiring it is “unjustified, disproportionate, and not necessary for the provision of online display advertising services on Meta’s platforms.”

The UK Competition and Markets Authority has also questioned Meta’s data practices, arguing that they could give Meta an unfair competitive advantage. However, the authority put a stop to it research after Meta agreed to limit the use of advertising data and allow advertisers to opt out of the use of their data.

Margrethe Vestager, de outgoing European Commissioner for Competitionsaid these practices provide Meta “advantages that other online advertising providers could not match.”

“This is illegal under EU antitrust rules. Meta must stop this behavior now,” she said in the newspaper press release.

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Meta’s ownership of Facebook and Instagram makes it dominant in the social media and social media digital advertising markets. While this is not illegal in itself, it does place a responsibility on the country under European law not to abuse its position by restricting competition in these two markets.

The Commission has initiated proceedings for the first time against Meta’s possible anti-competitive behavior June 2021 and initial fees issued through a Communication of objections in December 2022.

The fine was calculated by taking into account the duration and severity of the infringement, as well as the respective turnover of Meta and Marktplaats. When the money is paid, it goes to the EU’s general budget, reducing Member States’ contributions the following year and the burden on taxpayers.

Meta appeals fine, denies claims about Marketplace and advertising data

Meta immediately responded to the Commission’s announcement and said that this would be the case appeal against 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 does not use competitors’ data to benefit Marketplace because it ” has built systems and controls to ensure that.”

It added that the Commission “does not provide evidence of competitive harm to rivals or any harm to consumers,” using eBay, Leboncoin and Marktplaats as examples of rivals that are still finding success. In any case, Meta pointed out that EU competition law “does not preserve the established business positions of incumbent providers in the face of innovation.”

Meta also referred to September report by former President of the European Central Bank, Mario Draghi, that called for an overhaul to increase the region’s competitiveness and innovation, arguing that the fine contradicts these objectives. The tech giant quoted this report again a few days ago panders to regulators regarding its advertising practices.

The EU’s continued pursuit of Meta’s advertising practices

Vestager has long had Meta and rivals such as Apple, Google and Amazon in her sights. The name of the game is to protect the digital autonomy of EU citizens and hold tech giants accountable for their data collection and privacy practices.

A large portion of Meta’s revenue comes directly from the clicks and engagement ads it generates on Facebook and Instagram. Losing a segment of user data as large as the EU’s 27-country population could hurt their continued growth, so Meta has a financial interest in meeting EU requirements. In the third quarter of this year 23.5% of advertising revenue was generated by European users.

Meta is currently challenging the Commission for including Marketplace and Messenger on the list core platform services which must meet the requirements of the DMA, as determined “an important gateway for business users to reach end users,

A company spokesperson said this The edge that Marketplace should not qualify because it is a consumer-to-consumer service and Meta is not in the middle. Compliance with the DMA means Meta will have to follow data sharing and interoperability rules, which could impact its competitive advantage.

Meta was too was fined EUR 110 million by the Commission in 2017 for providing misleading information during the WhatsApp acquisition three years earlier. The company had assured regulators that it could not automatically link user accounts between the two platforms, but later introduced features that do so.

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The European Data Protection Commission has done this over the years has fined Meta several times for violation GDPR rules based on its targeted advertising practices. In addition to the DMA and GDPR, Meta must comply with the Digital Services Acta set of rules designed to govern how ‘Very large online platforms” handle privacy, protect their users and operate transparently.

But it’s not just advertising data that Meta and the EU are at war over. In June, Meta slowed down the training of its large language models on public content shared on Facebook and Instagram in Europe after regulators suggested it might require permission from the content owners. Meta AI, the groundbreaking AI assistant, has still not been released within the block due to its problems “unpredictable” regulations.

Meta representatives, along with Spotify, SAP, Ericsson, Klarna and more, signed an open letter to Europe in September express concerns about ‘inconsistent regulatory decision-making’. The letter states that interventions by European data protection authorities have created uncertainty about what data they can use to train their AI models.