EU, UK investigate Facebook over classified ad competition

LONDON (AP) — European Union and British regulators opened dual antitrust investigations Friday into whether Facebook distorts competition in the classified advertising market by using data to compete unfairly against rival services.

The coordinated effort represents an escalation by European regulators in their battle to rein in the dominance of big tech companies. The focus of the investigations highlights a longstanding concern that the data they collect from people or businesses using their platforms is used to get an advantage over competitors, which could include those same businesses.

“Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups,” said Margrethe Vestager, the European Commission’s executive vice president in charge of competition policy. “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.”

The U.K.’s Competition and Markets Authority said in a simultaneous announcement that it launched its own probe to examine whether Facebook’s collection and use of data gave it an unfair advantage over competitors providing classified data and online dating services.

Facebook said it “will continue to cooperate fully with the investigations to demonstrate that they are without merit.”

Marketplace, Facebook’s classified ad service, and Facebook Dating “offer people more choices and both products operate in a highly competitive environment with many large incumbents,” the company said in a statement.

The EU’s executive commission, the bloc’s top antitrust enforcer, is looking at the possibility that Facebook collects data on what users are interested in based on how rival classified ad providers are advertising their sites to Facebook users. The commission is worried Facebook then uses that data to tailor Marketplace to outcompete the rival sites.

It’s also looking at whether the way Facebook embeds its Marketplace into the social network gives it an advantage in reaching customers and shutting out competing sites, in violation of EU competition rules.

The U.K.’s competition watchdog is pursuing its own investigation, which includes examining whether data from Facebook Login was unfairly used. The feature lets users sign into other websites, apps and services with their Facebook credentials, making it a potentially big source of information on users’ interests.

“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,” Andrea Coscelli, chief executive of the CMA, said in a press statement.

The EU and U.K. investigations could result in formal charges, but it’s not a given. Regulators have the power to impose penalties worth up to 10% of a company’s annual revenue, which in Facebook’s case would amount to tens of billions of dollars.

Also Friday, Germany’s competition regulator opened an antitrust investigation into Google’s News Showcase licensing platform for publishers. The Federal Cartel Office, or Bundeskartellamt, said it’s looking into whether Google’s contracts include “unreasonable conditions” for news publishers using the platform, which launched last fall.

Kelvin Chan, The Associated Press