The European Commission has fined 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 infringement
Meta is a US multinational technology company. Its flagship product is its personal social network Facebook. It also offers an online classified ads service, called “Facebook Marketplace”, where users can buy and sell goods.
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.
In particular, the Commission found that 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 found that 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.
Fine
The Commission has ordered Meta to bring the conduct effectively to an end, and to refrain from repeating the infringement or from adopting practices with an equivalent object or effect in the future.
The fine of €797.72 million was set on the basis of the Commission’s 2006 guidelines on fines (see press release and MEMO).
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. In addition, the Commission considered Meta’s total turnover, to ensure sufficient deterrence for a company with resources as significant as Meta’s.
Background
In June 2021, the Commission opened formal proceedings into possible anticompetitive conduct of Facebook. In December 2022, the Commission sent Meta a Statement of Objections, to which Meta responded in June 2023.
Article 102 of the TFEU and Article 54 of the EEA Agreement prohibit the abuse of a dominant position.
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.
Fines imposed on companies found in breach of EU antitrust rules are paid into the general EU budget. These proceeds are not earmarked for particular expenses, but Member States’ contributions to the EU budget for the following year are reduced accordingly. The fines therefore help to finance the EU and reduce the burden for taxpayers.
More information on this case will be available under the case number AT.40684 in the public case register on the Commission’s competition website, once confidentiality issues have been resolved.
Quote(s)
Today we fine Meta €797.72 million for abusing its dominant positions in the markets for personal social network services and for online display advertising on social media platforms. 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. Meta must now stop this behaviour.
Margrethe Vestager, Executive Vice-President in charge of competition policy
Source – EU Commission
Meta: Our response to the European Commission’s decision on Facebook Marketplace
November 14, 2024
Takeaways
- We built Marketplace in response to consumer demand – this decision ignores the market realities, and will only serve to protect incumbent marketplaces from competition.
- The European 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.
Today, the European Commission announced a decision claiming that Facebook Marketplace has hindered competition for online marketplaces in Europe. This decision ignores the realities of the thriving European market for online classified listing services and shields large incumbent companies from a new entrant, Facebook Marketplace, that meets consumer demand in innovative and convenient new ways. We will appeal this decision to ensure that consumers are well served in the EU.
Facebook Marketplace Meets Consumer Demand
From the very beginning, people have bought and sold items on Facebook. When Facebook Marketplace first launched globally in 2016, people in the European Economic Area had organically created more than 400,000 groups focused on buying, selling or promoting goods on Facebook. We built Facebook Marketplace in 2016 to provide a more convenient and easy-to-use way for people to discover, buy, and sell items at no charge. In doing so, we provided European users with a new choice beyond the large incumbent online marketplaces that have dominated the landscape for a long time and continue to do so. In fact, the German competition regulator, the Bundeskartellamt, welcomed the “effective competition […] from newcomers such as… Facebook Marketplace” in a previous merger decision.
Half a Decade of Investigation but No Coherent Theory or Evidence of Harm
The European Commission’s decision claims that Meta imposes Facebook Marketplace on people who use Facebook in an illegal “tie”. But that argument ignores the fact that Facebook users can choose whether or not to engage with Marketplace, and many don’t. The reality is that people use Facebook Marketplace because they want to, not because they have to.
The decision also argues that Meta could use advertising data from rival marketplaces that advertise on Facebook to compete against them with Facebook Marketplace. But we don’t use advertisers’ data for this purpose and we have already built systems and controls to ensure that.
While the European Commission could not find any evidence of harm to competitors, they claim the entry and expansion of Facebook Marketplace has the potential to hinder the growth of large incumbent online marketplaces in the EU instead. But those very marketplaces are actually continuing to grow and dominate in the EU. Platforms like eBay, Leboncoin in France, Marktplaats in the Netherlands, Subito in Italy, Blocket in Sweden and Finn.no in Norway are formidable competitors and the market leader in many member states. They have continued to report considerable commercial success, including strong financial results and growth, since Facebook Marketplace launched. Successful new entrants — such as Vinted — have also emerged and continue to grow and thrive in Europe.
Ultimately, the European Commission appears to have ignored that empirical evidence. For the entire case to rest on a hypothetical potential to harm competition confirms that, at best, this is a case that is still searching for a coherent theory of harm.
Furthermore, the real problem is that this case entirely distorts competition law. 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 huge cost to consumers. It is disappointing that the Commission 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.
What Happens Next?
We will appeal the decision. In the meantime, we will comply, and will work quickly and constructively to launch a solution which addresses the points raised. We aim to make announcements shortly to reassure our European users that Facebook Marketplace is here to stay.
Source: Meta
Statement des EU-Abgeordneten Markus Ferber (EVP/CSU) zur Kartellstrafe gegen Meta
Heute hat die Europäische Kommission eine Strafe von fast 800 Millionen Euro gegen das Technologie-Unternehmen wegen Verstößen gegen das EU-Kartellrecht verhängt. Der Sprecher der EVP-Fraktion im Wirtschafts- und Währungsausschuss (ECON) im Europäischen Parlament, Markus Ferber, erklärte dazu:
„Wettbewerbsregeln müssen auch in der digitalen Welt gelten – diesem Grundsatz kann und darf sich auch ein Tech-Riese wie Meta nicht entziehen. An ein Unternehmen, das wie Meta ein Torwächter des Internets ist, müssen die striktesten Maßstäbe angelegt werden. Mit einer marktbeherrschenden Stellung geht immer eine besondere Verantwortung einher, der Meta nicht gerecht geworden ist.
Angesichts der jüngeren Bilanz der Kommission in Wettbewerbsverfahren gegen die Internetriesen bleibt zu hoffen, dass die Kommission den Fall dieses Mal wasserdicht vorbereitet hat. Eine abermalige Niederlage vor dem EuGH würde der Kommission nicht gut zu Gesicht stehen.“
Quelle: Markus Ferber