LONDON – European Union and UK regulators announced on Friday that they are starting separate antitrust investigations into Facebook and stepping up efforts to contain the world’s largest tech companies.
Investigations by the European Commission, the executive body of the 27-nation union, and the UK’s Competition and Markets Authority target a key business strategy for Facebook and other big tech companies: harness their size and power in one area to step in. Amazon used its position as the largest online retailer to become a major player in video streaming. Apple used the iPhone to develop one of the world’s largest mobile payment systems, Apple Pay. Google has spread its dominance as a search engine over many different areas.
Regulators said they would open formal investigations into Facebook Marketplace, an eBay-like classified ad service launched in 2016 to allow users to buy and sell products. It is investigating whether Facebook has wrongly used the data collected from advertisers to bring Marketplace to the more than two billion users of its main social network, which gives it an unfair advantage over competitors, which is against European Union competition law. The UK is also looking into Facebook Dating, a service the company launched in Europe last year.
The investigations intensify the already far-reaching scrutiny that technology giants are facing by governments around the world. Regulators in the United States, China, India, Australia, Russia and Latin America are investigating and bringing charges against the companies, accusing them of crushing rivals and harming consumers. On Friday, the German competition authority announced an investigation against Google over the treatment of publishers who use the company’s Google News Showcase. Google pays publishers for the content, and the regulator said they are investigating whether the company is unfairly treating publishers for putting their stories on the tool.
The European investigations into Facebook open a new flank for the social media giant. Last year, the Federal Trade Commission and almost every US state accused the company of using mergers to drive out competition and create a monopoly.
“These inquiries to Facebook cover different areas, and today’s actions underscore that concern about technology platforms is widespread, and not disappearing, worldwide,” said Michael Kades, director of markets and competition policy for the Washington Center for Equitable Growth, a root cause and effects of inequality.
Margrethe Vestager, the executive vice-president of the European Commission responsible for competition policy, said on Friday that Facebook had collected “huge amounts of data” on the activities of its users “in order to make it possible to target certain customer groups”.
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“We will examine in detail whether this data gives Facebook an unjustified competitive advantage, particularly in the area of online classified ads, where people buy and sell goods every day, and where Facebook also competes with companies from which it collects data,” she said in one Opinion.
“In today’s digital economy, data shouldn’t be used in ways that distort competition,” she said.
In the UK, antitrust authorities are already investigating the company’s advertising practices. On Friday, the competition authority announced that it is now dealing with Facebook Marketplace and Facebook Dating. The UK regulator said it would work with the European Commission even though the investigations are independent.
Facebook defended its business practices in a statement on Friday. “Marketplace and dating give people more choice, and both products operate in a highly competitive environment with many large established companies,” said a Facebook representative. “We will continue to cooperate fully in the investigation to show that it is unfounded.”
The announcements are the beginning of a formal investigation that can take years to complete.
A preliminary investigation was already underway, and the EU Commission sent questions to Facebook’s competitors. Last year, Facebook sued the European Commission for requests from regulators to surrender documents and data, saying the materials searched were too extensive and contained highly sensitive information about employees. Facebook said it provided more than a million documents related to the Marketplace investigation.
Since leaving the European Union, the UK has stepped up its efforts to regulate how big tech companies use their size to penetrate new sectors and the problems that regulation poses. Last year the competition authority published a report calling for stricter controls on Facebook and Google, especially in online advertising. The UK is considering creating a regulator to oversee the largest tech companies. This year, the UK launched an antitrust investigation against Google and Apple’s App Store.
European Union regulators have been perhaps the most aggressive watchdogs in the tech industry. In November, regulators filed subpoenas against Amazon for unfairly using its size and access to data to harm smaller retailers. In May, Apple was also charged with anti-competitive App Store policies.
In addition to the antitrust investigations, Ms. Vestager is leading efforts in the European Union to pass legislation to regulate the tech industry more like industries like banking or transportation, a process that could take until 2022 or beyond. The proposed laws would make it easier for regulators to intervene in the digital economy and could include restrictions on how companies use their size to enter new markets. Facebook and others could also face new legal requirements to moderate user posts on their platforms.
Eshe Nelson contributed the coverage from London and Cecilia Kang from Washington.