EU fines Meta $840 million for 'abusive' Facebook ad practices

The EU fined online giant Meta almost 800 million euros on Thursday for breaching antitrust rules by giving users of its Facebook social network automatic access to classified ads service Facebook Marketplace.

The European Commission said the US tech titan also abused its dominant position by imposing unfair trading conditions on other online classified ads service providers that advertise on its platforms.

“This is illegal under EU antitrust rules. Meta must now stop this behaviour,” the bloc’s competition chief, Margrethe Vestager, said in a statement.

Meta said it would appeal, alleging the decision ignored “the realities of the thriving European market for online classified listing services.

“Facebook users can choose whether or not to engage with Marketplace, and many don’t. The reality is that people use Facebook Marketplace because they want to, not because they have to,” the firm said in a statement.

Among the 10 largest antitrust fines ever imposed by the 27-nation European Union, it is the latest in a string of hefty penalties slapped on Big Tech companies in recent years by the commission, the regulator for the bloc.

– ‘Abusive practices’ –

Detailing what it termed “abusive practices” by Meta, the commission said that because Facebook Marketplace was tied to Facebook, the former enjoyed a “substantial distribution advantage which competitors cannot match.”

“All Facebook users automatically have access and get regularly exposed to Facebook Marketplace whether they want it or not,” it said.

Additionally Meta imposed unfair conditions on competitors in the classified ads service who advertised on Facebook and Instagram, the commission said.

This allowed it to “use ads-related data generated by other advertisers for the sole benefit of Facebook Marketplace”, it said.

Meta, which also owns WhatsApp and Instagram, contended it did not “use advertisers’ data for this purpose” and has “built systems and controls to ensure that”.

“It is disappointing that the Commission has chosen to take regulatory action against a free and innovative service built to meet consumer demand,” the company said.

Meta’s dominant position in the market for personal social networks comes with a special responsibility not to abuse it by restricting competition, according to the EU.

– ‘Duration and gravity’ –

The commission opened formal proceedings into possible anticompetitive conduct by Facebook in June 2021, communicating its concerns to Meta in December 2022 — and receiving the firm’s response in June 2023.

The EU fined the company 797.72 million euros ($840 million), a sum the commission said took into account the “duration and gravity of the infringement”, as well as the turnover of Meta and Facebook Marketplace.

Meta’s total revenue last year stood at around $135 billion.

The European commissions has had several run-ins with Meta as part of a broader clampdown on abusive Big Tech practices.

Its policy arsenal has been beefed up over the past two years with major twin laws, the Digital Services Act and the Digital Markets Act, that carry massive financial penalties in the event of infringements.

In July the EU accused Meta of breaching the digital rules with its new “pay or consent” system. It meant users had to pay to avoid data collection, or agree to share their data with Facebook and Instagram to keep using the platforms for free.

Bowing to pressure from EU regulators, Meta announced this week it was offering non-paying users in the bloc the option of receiving less targeted ads, as well as cutting subscription rates for entirely ad-free services.