Facebook is facing a twin investigation by UK and EU officials into allegations that it breached competition rules by using data gathered from advertisers on its social media network to compete with rivals.
The formal investigation launched today by the European Commission will also look at whether Facebook “ties its online classified ads service ‘Facebook Marketplace’ to its social network, in breach of EU competition rules.”
In a statement, executive vice-president Margrethe Vestager, in charge of competition policy at the European Commission, said: “Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups.
“We will look in detail at whether this data gives Facebook an undue competitive advantage in particular on the online classified ads sector, where people buy and sell goods every day, and where Facebook also competes with companies from which it collects data.
“In today's digital economy, data should not be used in ways that distort competition.”
The Commission said it plans to examine whether Facebook's position in social networks and online advertising allows it to harm competition in neighbouring markets.
Separately, the UK’s Competition and Markets Authority (CMA) announced it has also launched a probe into whether Facebook has unfairly used the data gained from its advertising and single sign-on to benefit its own services.
In particular, it also singled out Facebook Marketplace - where users and businesses can put up classified ads to sell items - and Facebook Dating, a dating profile service it launched in Europe in 2020.
Andrea Coscelli, chief executive of the CMA, said: “We intend to thoroughly investigate Facebook’s use of data to assess whether its business practices are giving it an unfair advantage in the online dating and classified ad sectors.
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“Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice.”
Both the European Commission and the CMA said they would work closely together as the investigations unfold although both are at early stages.
The Commission said that following a preliminary investigation, it has "concerns that Facebook may distort competition for the online classified ads services". The CMA said since this is only the start of its investigation, "no decision has yet been made on whether Facebook has broken the law."
Responding to today's announcements, a Facebook company spokesperson said: "We are always developing new and better services to meet evolving demand from people who use Facebook.
“Marketplace and Dating offer people more choices and both products operate in a highly competitive environment with many large incumbents.
“We will continue to cooperate fully with the investigations to demonstrate that they are without merit.” ®