The European Union has accused Meta Platforms, Inc. of breaching antitrust rules by allegedly distorting competition in the markets for online classified ads.
In preliminary findings published on Monday, the bloc’s Commission said it “takes issue with Meta META, -2.41% tying its online classified ads service, Facebook Marketplace, to its personal social network, Facebook. Shares of Meta fell 1.8% in premarket trading.
“The Commission is also concerned that Meta is imposing unfair trading conditions” on Facebook Marketplace’s competitors for its own benefit,” according to the statement. The EU said it believed that Meta “abused its dominant position in two ways.”
Meta rejected the claims.
“The claims made by the European Commission are without foundation. We will continue to work with regulatory authorities to demonstrate that our product innovation is pro-consumer and pro-competitive,” Tim Lamb, the company’s head of EMEA Competition, said in a statement.
The Commission said it has two main concerns with Meta. Firstly, by tying Facebook Marketplace with its dominant personal social network Facebook, users of the social media site “automatically have access to Facebook Marketplace, whether they want it or not.” Competitors of Facebook’s Marketplace could not match its substantial distribution advantage, it added.
“Second, Meta unilaterally imposes unfair trading conditions on competing online classified ads services which advertise on Facebook or Instagram,” the EU said.
The Commission voiced concern that the terms and conditions Meta applies authorizing it 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.”
Such conditions, said the EU, impose a burden on competitors and only benefit Facebook Marketplace.
Meta is apparently studying the EU’s statement and plans to comment further, but is also cooperating fully with the investigation, said a source close to the company.
Targeting the EU’s main concern, Meta believes the MarketPlace ecosystem offers more choice and a better interface for buying and selling of goods, as opposed to bigger established incumbents and has already been thriving, with Amazon AMZN, -1.20%, eBay EBAY, -0.01% and Vinted among those active in the Europe space, the source said.
The company also rejects the claim that it uses advertiser data from competitors to compete against them and that users and can choose whether or not they use Marketplace, said the source.
“With its Facebook social network, Meta reaches globally billions of monthly users and millions of active advertisers,” said Margrethe Vestager, executive vice president in charge of competition policy, in the same statement.
Tying Marketplace to Facebook drives users towards using that online classified ad service, she said.
“Furthermore, we are concerned that Meta imposed unfair trading conditions, allowing it to use of data on competing online classified ad services. If confirmed, Meta’s practices would be illegal under our competition rules,” said Vestager.
— Barbara Kollmeyer contributed to this article