Facebook Faces Two Antitrust Inquiries in Europe
LONDON — European Union and British regulators said on Friday that they were beginning separate antitrust inquiries into Facebook, broadening their efforts to rein in the world’s largest technology companies.
The investigations by the European Commission, the executive arm of the 27-nation union, and Britain’s Competition and Markets Authority take aim at a key business strategy used by Facebook and other large tech companies: to use their size and power in one area to enter others. Amazon used its position as the largest online retailer to become a major player in video streaming. Apple leveraged the iPhone to create one of the world’s largest mobile payment systems with Apple Pay. Google has parlayed its dominance as a search engine into many different areas.
The regulators said they would start formal investigations of Facebook Marketplace, an eBay-like classifieds service introduced in 2016 for users to buy and sell products. Under scrutiny is whether Facebook unfairly used data collected from advertisers to help boost Marketplace to the more than two billion users of its main social network, giving it an unfair advantage over rivals in violation of European Union competition laws. Britain is also looking into Facebook Dating, a service the company introduced in Europe last year.
The inquiries intensify the already wide-ranging scrutiny that tech giants are facing from governments around the globe. Regulators in the United States, China, India, Australia, Russia and Latin America are investigating and pressing charges against the companies, accusing them of squashing rivals and harming consumers. On Friday, Germany’s competition authority announced an investigation into Google for its treatment of publishers using the company’s Google News Showcase. Google pays publishers for the content, and the regulator said it was exploring if the company treated publishers unfairly to have their stories featured on the tool.
The European investigations into Facebook open a new flank for the social media giant. Last year, the Federal Trade Commission and nearly every U.S. state accused the company of using mergers to squeeze out competition and create a monopoly.
“These inquiries into Facebook address different areas, and today’s actions underscore that concern with tech platforms is worldwide and not going away,” said Michael Kades, the director of markets and competition policy for the Washington Center for Equitable Growth, a center that researches the causes and effects of inequality.
Margrethe Vestager, the European Commission’s executive vice president in charge of competition policy, said Friday that Facebook collected “vast troves of data” on the activities of its users, “enabling it to target specific customer groups.”
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“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,” she said in a statement.
“In today’s digital economy, data should not be used in ways that distort competition,” she said.
In Britain, antitrust regulators were already investigating the company’s advertising practices. On Friday, the competition regulator said it was now looking at Facebook Marketplace and Facebook Dating. The British regulator said it would work with the European Commission, though the investigations are independent of each other.
Facebook defended its business practices in a statement on Friday. “Marketplace and Dating offer people more choices, and both products operate in a highly competitive environment with many large incumbents,” a representative of Facebook said. “We will continue to cooperate fully with the investigations to demonstrate that they are without merit.”
The announcements are the beginning of formal investigations that may take years to complete.
A preliminary investigation had already been underway, with the European Commission sending questions to Facebook’s rivals. Last year, Facebook sued the European Commission over demands made by regulators to turn over documents and data, saying the materials sought were overly broad and included highly sensitive information about employees. Facebook said it had provided more than one million documents related to the Marketplace investigation.
Since leaving the European Union, Britain has increased its efforts to regulate how large tech firms use their size to enter new sectors and the problems that poses for regulations. Last year, the competition authority published a report that called for tougher oversight of Facebook and Google, particularly in online advertising. Britain is considering the creation of a regulatory agency tasked with overseeing the biggest tech companies. This year, Britain started antitrust investigations into Google and Apple’s App Store.
European Union regulators have been perhaps the world’s most aggressive tech industry watchdogs. In November, regulators filed preliminary charges against Amazon for unfairly using its size and access to data to harm smaller merchants. In May, charges were also filed against Apple over anticompetitive App Store policies.
In addition to the antitrust investigations, Ms. Vestager is leading an effort in the European Union to pass laws to make the tech industry regulated more like industries such as banking or transportation, a process that could take until 2022 or beyond to complete. The proposed laws would make it easier for regulators to intervene in the digital economy and could include restrictions around how companies leverage their size to enter new markets. Facebook and others could also face new legal requirements for moderating users’ posts on their platforms.
Eshe Nelson contributed reporting from London, and Cecilia Kang from Washington.
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