The European Commission alleges that Meta is abusing Facebook’s popularity to gain customers for Facebook Marketplace. The regulator warns that possible fines could amount to billions of euros.
The European Union enforces strict market rules. Large companies like Meta and Microsoft face restrictions when upselling products and services. Brussels wants to prevent organizations from using their popularity in one sector to dominate other sectors.
Over the past few years, Microsoft repeatedly got into trouble by forcing operating system Windows onto cloud providers. The tech giant has a large share of the cloud infrastructure market. Under European Union standards, it’s unfair to use this share to hog the operating system market.
The rules apply only to the world’s most popular products and services, including Windows and Facebook. The European Commission recently announced that Meta is suspected of abuse of power. The tech giant allegedly uses Facebook to gain customers for Facebook Marketplace.
More than €10 billion
The European Commission is the European Union’s highest market regulator. The publication of an allegation is one of the steps in the enforcement process. It doesn’t mean that Meta is guilty, but signals that the European Commission is filing a case in an attempt to convict the tech giant.
A lawsuit will determine Meta’s guilt or innocence. Based on the outcome, the European Commission could impose coercive measures. Possible fines amount to 10 percent of the company’s annual turnover. This equates to billions of euros for Meta. The timeline of the investigation and the start of the lawsuit are unknown.
Allegations
In the announcement, the European Commission describes that Facebook and Facebook Marketplace have two separate functions. Facebook is a social media platform while Facebook Marketplace provides a marketplace. Despite their differences, the services are connected. Facebook users automatically have access to Facebook Marketplace, even if they never use the service.
Whenever Facebook users are in the market for a service to buy or sell products, Facebook Marketplace has an edge over competitors, according to the European Commission. The regulator argues that the link can make Facebook Marketplace more attractive than competing services. The European Commission wants to prevent Facebook’s popularity from distorting the market for online marketplaces.
As a second objection, the European Commission alleges that Meta applies unfair terms for customers advertising online marketplaces on Facebook and Instagram. According to the regulator, the terms allow Meta to use competitors’ advertising data to the advantage of Facebook Marketplace.
15 hours ago
