Meta Fined $841M by EU Over Abusing Classified Ads Dominance

Meta Platforms Inc. was hit with a €798 million ($841 million) fine by European Union regulators by tying its Facebook Marketplace service to the social network, the U.S. tech giant’s first ever penalty for E.U. antitrust violations.

In a groundbreaking decision, the European Commission ordered Meta to stop tying its classified-ads service to Facebook’s sprawling social media platform, and refrain from imposing unfair trading conditions on rival second-hand goods platforms.

“Meta tied its online classified ads service Facebook Marketplace to its personal social network Facebook and imposed unfair trading conditions on other online classified ads service providers,” E.U. antitrust chief, Margrethe Vestager, said. “It did so to benefit its own service Facebook Marketplace.”

The move adds to a spate of bad news for Meta. A U.S. judge ruled that the Federal Trade Commission’s antitrust lawsuit against the company can continue to trial on Wednesday, while Donald Trump was elected U.S. president again. His victory helped propel the social networking app Bluesky, which competes with Meta’s Threads, to the top of Apple Inc.’s US App Store.

Trump called Facebook an “enemy of the people” just eight months ago and suggested Chief Executive Officer Mark Zuckerberg should go to jail.

The EU fine is likely to be one of the final acts for Vestager, who’s set to leave her post before the end of the year. Over the past decade, she has been one of Silicon Valley’s toughest critics levying billions of euros in antitrust penalties, including over €8 billion in fines against Google.

The decision follows a probe into how Meta leverages Facebook’s billions of users to squeeze out rivals. EU watchdogs said Menlo Park California-based Meta also used data from rival platforms that advertised on Facebook to boost its Marketplace service.

Meta vowed to appeal the decision at the bloc’s courts, a process that could take several years. It said the penalty “ignores the realities of the thriving European market” and “shields large incumbent companies.”

Meta shares fell as much as 1% after trading opened in New York. The company was earlier fined €110 million by the EU merger regulator for providing misleading information about its takeover of messaging service WhatsApp in 2017.

Amazon.com Inc. dodged EU fines in a similar case in 2022, targeting how the US. ecommerce firm allegedly pillaged rivals’ sales data to unfairly favor it own products. Regulators accepted a number of proposals from Amazon, including a vow to stop using non-public data on independent sellers on its marketplace for its competing retail business.

Facebook’s Marketplace has also been targeted by other regulators. It settled a probe with the U.K.’s Competition and Markets Authority after agreeing to a slate of concessions.

Meta reported sales of $40.6 billion in the quarter that ended Sept. 30, a jump of 19% compared to a year earlier. In recent years, Meta has been working to balance huge outlays on technologies like artificial intelligence and virtual reality, while still trying to ensure that its core digital advertising business is still growing.

While the EU can levy fines of 10% of global sales, its penalties are usually much smaller and take into account severity of the allegations and the sub-markets involved.

That’s led to frustration among regulators and a clamor for tougher remedies, including more structural solutions. Like the US, the EU has been weighing a potential breakup of Alphabet Inc.’s Google to allay concerns over its adtech dominance.

The new Digital Markets Act bolsters traditional antitrust law by placing strict guardrails on Silicon Valley firms.

The European Commission has kick-started probes into Google and Meta to vet their compliance with the DMA, while Apple Inc. is soon likely to face the bloc’s first fine for failing to step into line with the rules. This week Meta pitched changes to the way it targets users with ads on Facebook and Instagram, in order to offset an escalation in the investigation.

Top photo: The Meta logo on a laptop computer in the Brooklyn borough of New York, US, on Tuesday, July 26, 2022. Photographer: Gabby Jones/Bloomberg.