The European Union (EU) has opened a formal investigation into Facebook's classified advertising service. In an emailed statement on June 4, the European Commission informed that it will probe whether the social network violated competition rules by using data gathered from advertisers to compete against them in classified ads, according to a report by Bloomberg.
The Commission will also check if the company ties its Facebook Marketplace small ad service to the social network.
The significance of this antitrust probe by the EU is that it's the first time a case into Facebooks' behaviour has been escalated beyond the preliminary stages. The company was previously fined by the EU for failing to provide the correct information in the merger review of the WhatsApp takeover.
Margrethe Vestager, the EU's completion chief apprised that regulators will look into the 'vast troves of data' that Facebook collects and will probe if that gives the company an undue advantage in particular on the online classified ads sector, where people buy and sell goods every day.
The probe by Vestager's team has been ongoing since 2019. Facebook had filed lawsuits in order to curb the amount of information the probe could derive.
Facebook “will continue to cooperate fully with the investigations to demonstrate that they are without merit,” the company said in an emailed statement, as reported by Bloomberg. “We are always developing new and better services to meet the evolving demand from people who use Facebook.”
Simultaneous to the EU's probe, the UK has also said it opening probes into Facebook’s Marketplace and Dating services hours after Germany’s antitrust watchdog announced a case targeting the Google News Showcase product. UK's Competition and Market Authority (CMA) said it's running an independent investigation, however, it will cooperate with the EU Commission's probe.
By opening a formal probe, regulators can now start building firm evidence of antitrust violations, a process that can lead to a charge sheet, or statement of objections, and may eventually culminate in fines or an order to change the way a business operates.
Facebook's business during the pandemic has been quite dependent on online commerce as more and more people are buying goods online.
“Commerce ads continue to do very well and drive a meaningful amount of our overall business,” Facebook Chief Executive Officer Mark Zuckerberg said on an earnings call in April. He said more than 1 billion people now visit Facebook Marketplace each month.
With a tech firm as large as Facebook under probe, yet another company joins the bandwagon of tech firms fighting against regulators. Germany is already investigating Facebook and Amazon.com Inc. while France is examining advertising practices by Google and Apple Inc.