The European Commission on Thursday fined Meta €797.72 million for violating EU antitrust laws. The penalty stems from Meta’s integration of Facebook Marketplace with its social network, Facebook, and its imposition of allegedly unfair terms on other online classified ad providers.
Case Background
The Commission initiated an investigation in June 2021 to examine whether Meta’s practices were anticompetitive. The Commission issued a Statement of Objections in December 2022, and Meta responded in June 2023, as EU rules under Article 102 of TFEU and Article 54 of the EEA Agreement prohibit abuse of a dominant market position.
While holding market dominance is not unlawful, dominant firms must avoid anti-competitive conduct that may affect the markets in which they operate or related markets.
European Commission’s Findings and Infringements
Meta, a U.S.-based tech company, is considered dominant in the EEA’s personal social networking market and in online display advertising on social platforms in national markets. According to the Commission, Meta misused this dominant position by:
- Tying Facebook Marketplace to Facebook: All Facebook users automatically gain access to Marketplace, potentially disadvantaging competing classified ad platforms by providing Marketplace with a distribution advantage they cannot match.
- Imposing Unfair Terms on Advertisers: Meta allegedly allows Facebook Marketplace to benefit from the advertising data generated by other online classified providers on its platforms, including Facebook and Instagram.
Financial Penalty and Order
The €797.72 million fine reflects the duration and gravity of Meta’s actions, as well as Facebook Marketplace’s turnover and Meta’s overall revenue. This penalty, in line with the Commission’s 2006 guidelines, will contribute to the EU budget, reducing the tax burden on member states.
The Commission also instructed Meta to cease its anti-competitive practices and avoid similar actions in the future.
Meta’s Response and Appeal
Meta has responded to the European Commission’s decision, which claims that Facebook Marketplace has hindered competition in the European online marketplace sector.
Meta argues that the Commission’s decision overlooks the dynamic nature of the European online classifieds market and protects dominant players from competition posed by Facebook Marketplace. Meta has confirmed plans to appeal the decision to ensure that consumers in the EU continue to benefit from innovative and convenient services.
Key Points from Meta’s Response:
Facebook Marketplace Meets Consumer Demand
Meta highlighted that Facebook Marketplace was created in 2016 to meet the growing demand from users already buying and selling goods on Facebook.
- At the time of its launch, over 400,000 groups had organically formed within the European Economic Area for buying, selling, and promoting goods.
- Meta claims that the platform provides a new option for users beyond the established, dominant online marketplaces.
Meta also noted that Germany’s competition regulator, Bundeskartellamt, had previously acknowledged Facebook Marketplace’s role in enhancing competition in the market.
No Coherent Theory or Evidence of Harm
Meta rejected the European Commission’s claims that Facebook Marketplace forces users into an illegal “tie” with Facebook.
- Pointed out that users can choose to engage with Marketplace, and many do not.
- Refuted the argument that it uses advertising data from rival marketplaces to gain an unfair advantage, emphasizing that they have built systems to prevent this.
Lack of Evidence
Meta stressed that the Commission could not find any evidence of harm to competitors. In fact, dominant platforms like eBay, Leboncoin, Marktplaats, Subito, Blocket, and Finn.no continue to thrive in Europe, while new entrants like Vinted have also succeeded.
Meta pointed out that the Commission’s case is based on the hypothetical potential for harm, without concrete evidence to support it. Meta argued that the real issue is the distortion of competition law, which should protect competitive processes and consumers, not the market positions of incumbents.
Meta expressed disappointment that the Commission’s decision could hinder a free, innovative service designed to meet consumer needs, especially when European political figures are advocating for more competition and innovation in the EU.
What Happens Next?
Meta confirmed that it will appeal the European Commission’s decision. In the interim, Meta intends to comply with the ruling and work to resolve the issues raised. The company plans to announce further updates shortly to reassure European users that Facebook Marketplace will continue to operate.
Speaking about the decision, Margrethe Vestager, Executive Vice-President in charge of competition policy, said,
Today, we fine Meta €797.72 million for abusing its dominant positions in personal social network services and online display advertising on social media platforms. Meta tied Facebook Marketplace to its social network Facebook and imposed unfair conditions on other online classified ads providers to benefit its own service, giving it advantages that competitors could not match. This conduct is illegal under EU antitrust rules, and Meta must now cease this behavior.