(Reuters) – The European Commission on Monday said it has warned Facebook parent company Meta (META.O) that it is breaching EU antitrust laws by distorting competition in markets for online classified advertising and abusing its dominant position.
The Commission said in a preliminary view that it would further investigate and that it could impose a fine of up to 10% of the company’s annual global turnover, if there is sufficient evidence of an infringement of European Union rules.
European Union’s antitrust chief Margrethe Vestager said in a statement that she is concerned that Meta ties its dominant social network Facebook to its online classified ad services, which is called Facebook Marketplace.
“This means Facebook users have no choice but to have access to Facebook Marketplace,” she said.
Meta denied its business practices were anti-competitive.
“The claims made by the European Commission are without foundation,” Meta spokesperson Tim Lamb said in a statement.
“We will continue to work with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive,” Lamb added.
The Commission said that besides tying its online classified ads service to its social network, Meta was also abusing its dominant position by unilaterally imposing unfair trading conditions on competing online classified ads services which advertise on Facebook or Instagram.
It said it was concerned the terms and conditions – which authorise Meta to use ads-related data derived from competitors for the benefit of Facebook Marketplace – are unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta’s platforms.
Facebook Marketplace was launched in 2016 and is used in 70 countries to buy and sell items.
Sources familiar with the matter last month told Reuters the EU antitrust regulators were drawing up charges against Meta over its use of customer data and the tying of its classified advertisements service to its social network.
The Commission said on Monday that it was concerned that Meta is imposing “unfair trading conditions” on competitors of its own classified ads service, Facebook Marketplace, that want to advertise on its social networks Facebook or Instagram.
The EU competition enforcer launched an investigation into Facebook in June last year, focusing on whether the social network unfairly uses advertisers’ data to compete with them in the online classified ads sector.
In a separate statement on Monday, the Commission also said it had closed its antitrust investigation into Google and Meta for online display advertising services, adding that “a careful assessment of evidence did not confirm its initial concerns”.
On March 11, the Commission had opened an investigation to assess whether Google and Meta agreed to weaken and exclude a competing technology to Google’s Open Bidding from the market for displaying ads on publisher websites and apps, in breach of EU antitrust rules.