EU suspects Facebook of abusing power with Marketplace, report says

May 26, 2021 by No Comments

The European Commission is on the verge of opening a formal probe of Facebook and its free Marketplace service, according to reports from Reuters and the Financial Times.

While the scope of the investigation is still being determined, the European Commission, the bloc’s executive arm, has queried Facebook and its competitors on at least three separate occasions. Those questions aimed to determine whether, in pushing Marketplace on its users, Facebook abused its market power. Given that a formal probe seems imminent, it’s likely that EC officials believe there’s a decent chance the company did.

Facebook’s Marketplace first appeared in 2016, and at the time, it was mostly viewed as a competitor to Craigslist. Conceptually, Marketplace and Craigslist are similar in that both allow people to post free, local classified advertisements. Craigslist has been slow to update its core product—superficially, it still looks like a Web 1.0 product, and it didn’t offer an official app until 2019—but Facebook’s Marketplace was mobile-friendly out of the gate and was soon prominently featured both on Facebook’s modern website and as a tab in its near-ubiquitous app.

While Craigslist remains mostly free, it does charge for some offerings in some markets. On the other hand, Facebook Marketplace remains entirely free, though it does run ads alongside listings.

The investigation would mark the first time EU antitrust officials have formally looked into Facebook’s practices. So far, it’s the only remaining Big Tech firm that the EU has not investigated.

Amazon was sued last year by the EC for using “very large quantities of non-public seller data” to make decisions “to the detriment of the other marketplace sellers,” the suit said. Apple was charged with breaking EU law regarding the fees it charges developers in the App Store. Google has been sued or investigated by the EC for issues surrounding its ad business, its pre-installed Android apps, and the prioritization of its services in search results. Microsoft also has a long history with EU antitrust officials, touching on concerns about the company’s acquisition of LinkedIn, the inclusion of Internet Explorer with Windows, and the bundling of Windows Media Player in the same.

Facebook bristled at the EC’s questions early in the informal phase of the investigation. The company even went so far as to sue the EC for what it called overly broad requests for information. 

“The exceptionally broad nature of the Commission’s requests means we would be required to turn over predominantly irrelevant documents that have nothing to do with the Commission’s investigations, including highly sensitive personal information such as employees’ medical information, personal financial documents, and private information about family members of employees,” Facebook associate general counsel Tim Lamb said in a statement to CNBC at the time.

The European Union General Court temporarily suspended the EC’s requests for documents from Facebook, handing the social media company a temporary victory. That reprieve may be over, though, as the EC appears ready to ramp up its investigation. 

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