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Today (June 4), the European Commission opened a formal investigation to determine whether Facebook has violated EU competition rules, writes Catherine Feore.

Online classifieds providers advertise their services through Facebook, at the same time as they compete with Facebook’s own online classifieds service, “Facebook Marketplace”. The Commission is examining whether Facebook could have given the Facebook Marketplace an unfair competitive advantage by using data obtained from competing suppliers when advertising on Facebook.

The formal investigation will also assess whether Facebook links its online classifieds service “Facebook Marketplace” to its social network. The Commission will examine whether the way in which Facebook Marketplace is integrated into the social network constitutes a form of tied selling which gives it an advantage in reaching customers. As a “social market”, you can also see larger profiles, mutual friends and chat with Facebook Messenger, different functionality from other providers.

The Commission points out that with nearly three billion people using Facebook on a monthly basis and nearly seven million companies advertising, Facebook has access to a vast mine of data on the activities of users of its social network and beyond that, which allows it to target specific customer groups.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “We will look in detail at whether Facebook has an unfair competitive advantage, especially in the online classifieds industry, where people buy and sell ads. goods every day, and where Facebook also competes with the companies from which it collects data. In today’s digital economy, data should not be used in a way that distorts competition.

UK: “We will work closely with the European Commission”

The UK Competition and Marketing Authority (CMA) has also launched an investigation into Facebook’s activities in this area. Commission competition spokesperson Ariana Podesta said: “The Commission will seek to work closely with the UK Competition and Markets Authority as independent investigations develop. “

Andrea Coscelli, Managing Director of CMA, said: “We intend to thoroughly investigate Facebook’s use of data to assess whether its business practices give it an unfair advantage in the online dating industries. and classifieds.

“Such an advantage can make it more difficult for competing businesses, including new and smaller businesses, to be successful, and can reduce customer choice.

“We will work closely with the European Commission as we each investigate these issues, and continue to coordinate with other agencies to tackle these global issues.”

The AMC pointed out how the Facebook login, which can be used to log into other websites, applications, and services using their Facebook login credentials, could be used for the benefit of Facebook’s own services. The CMA is also promoting “Facebook Dating” – a dating profile service that it launched in Europe in 2020.

Apart from this new survey of Facebook’s use of ad market data, the UK’s Digital Markets Unit (DMU) has started to examine how codes of conduct might work in practice to govern relationships between digital platforms. and groups, such as small businesses, who rely on these platforms to reach potential customers.

The DMU operates in a “phantom”, non-statutory form, pending legislation that will give it all its powers. Prior to that, the CMA will continue its work to promote competition and consumer interests in digital markets, including taking enforcement action where necessary.

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