Social media giant Facebook is being investigated by both UK and European competition watchdogs. They are concerned about its use of advertising data to gain unfair advantage over rivals.
The Competition and Markets Authority (CMA) is investigating if Facebook uses the data it gathers to benefit its own services, such as Marketplace.
The European Commission is looking at whether Facebook are in violation of EU rules by collecting information from advertisers to compete with them providing classified ads.
Facebook say they are fully cooperating with all investigations, to show they are “without merit”.
The CMA say Facebook gathers data through its digital advertising service. But it also captures information from people when they use its single sign-in option. This function enables people to sign-in on other websites and apps by using their Facebook login details.
The watchdog say it is investigating if the company use the data unfairly to compete with people and businesses who use Facebook Marketplace. Marketplace is an online service on the social media platform where people can post adverts to sell items. They are also looking into Facebook Dating. The CMA 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”.
Unfair advantages reduce customer choice
Advantages such as this can make it harder for competing firms to succeed, especially new or smaller businesses. A single firm monopolising services could lead to reducing customer choice.
The European Commission have opened a formal investigation. They are assessing if Facebook breached EU competition rules by using data in order to compete with advertisers in markets where it is active, such as classified ads. They will also examine if Facebook ties its online classified ads service to its social network. “In today’s digital economy, data should not be used in ways that distort competition”.
This is the European Commission’s first probe into the world’s largest social network. But it is no stranger to fighting against US tech giants. It is also investigating Amazon and Apple, and has already hit Google with fines of over €8bn (£6.8bn).
Both competition watchdogs are conducting their own independent investigation, but say they will work together closely as things develop.
In response, Facebook say its “Marketplace and Dating offer people more choices, and both products operate in a highly competitive environment”.
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