EU fines Meta €798 mn for antitrust violations tied to Facebook Marketplace

The European Commission has fined U.S. tech behemoth Meta €797.72 million for breaching EU antitrust rules by tying its online classified ads service Facebook Marketplace to its personal social network Facebook and by imposing unfair trading conditions on other online classified ads service providers.

The Commission's investigation found that Meta is "dominant" in the market for personal social networks, which is at least European Economic Area (‘EEA') wide, as well as in the national markets for online display advertising on social media.

The Commission found that Mark Zuckerberg-led Meta abused its dominant positions in breach of Article 102 of the Treaty on the Functioning of the European Union (‘TFEU') by tying its online classified ads service 'Facebook Marketplace' to its personal social network Facebook. This means that all Facebook users automatically have access and get regularly exposed to Facebook Marketplace whether they want it or not.

The Commission also found that the competitors of Facebook Marketplace may be foreclosed as the tie gives Facebook Marketplace a substantial distribution advantage, which competitors cannot match.

"Unilaterally imposing unfair trading conditions on other online classified ads service providers who advertise on Meta's platforms, in particular on its very popular social networks Facebook and Instagram. This allows Meta to use ads-related data generated by other advertisers for the sole benefit of Facebook Marketplace," the Commission said.

The Commission has ordered Meta to bring the conduct effectively to an end. It says the fine of €797.72 million was set on the basis of the Commission's 2006 guidelines on fines.

"In setting the level of the fine, the Commission took into account the duration and gravity of the infringement, as well as the turnover of Facebook Marketplace to which the infringements relate and which therefore defines the basic amount of the fine."

The Commission says it also considered Meta's total turnover, to ensure sufficient deterrence for a company with resources as significant as Meta's.

"Meta tied its online classified ads service Facebook Marketplace to its personal social network Facebook and imposed unfair trading conditions on other online classified ads service providers. It did so to benefit its own service Facebook Marketplace, thereby giving it advantages that other online classified ads service providers could not match. This is illegal under EU antitrust rules," says Margrethe Vestager, executive vice president in charge of competition policy.

The proceedings in the case had started in June 2021 and in December 2022, the Commission sent Meta a statement of objections, to which Meta responded in June 2023.

Market dominance is, as such, not illegal under EU antitrust rules. However, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets.

Meta's response:

The U.S.-based social media giant says it built Facebook Marketplace in response to consumer demand and the EU's decision ignores the market realities, which will only serve to protect "incumbent marketplaces" from competition. It said the Commission’s decision provides no evidence of competitive harm to rivals or any harm to consumers. "We will appeal this decision to promote better outcomes for European consumers. In the meantime, we will comply, and will work quickly and constructively to launch a solution which addresses the points raised."

Meta says the EU competition law is intended to protect the competitive process and consumers, not to preserve the established business positions of incumbent providers in the face of innovation. "Ironically, in the name of competition, this decision does just that at a huge cost to consumers."

Meta calls the decision "disappointing", adding that it has chosen to take regulatory action against a free and innovative service built to meet consumer demand, particularly when senior European political figures are calling for the EU to be more competitive, innovative and forward-thinking.