Regulators in both the UK and the European Union launched competition investigations into Facebook on Friday in a dual move against the social media giant's use of customer data to corner the digital advertising market.
The EU’s inquiry will focus on whether Facebook’s position in social networks and online advertising allows it to harm competition by using data provided by rival advertisers that list ads on its service.
“Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups,” EU competition chief Margrethe Vestager said in a statement.
“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 UK’s Competition and Markets Authority said it would probe whether Facebook was “abusing a dominant position in the social media or digital advertising markets through its collection and use of advertising data”.
The European Commission said a preliminary investigation suggested Facebook "may distort competition for the online classified ads services" by using "data obtained from competing providers in the context of their advertising on Facebook's social network, to help Facebook Marketplace outcompete them".
The social network could receive information on customers’ preferences through competitors’ advertisement activities and use this to adapt Facebook Marketplace, the commission said.
It will also investigate whether the embedding of Facebook Marketplace within the social network “constitutes a form of tying which gives it an advantage in reaching customers”, it said.
In a statement, a Facebook spokeswoman said: “We are always developing new and better services to meet evolving demand from people who use Facebook. Marketplace and Dating offer people more choices, and both products operate in a highly competitive environment with many large incumbents.
“We will continue to co-operate fully with the investigations to demonstrate that they are without merit.”
