Meta faces $11.8 billion fine in Europe for abuse of online advertising dominance

Extending its 65.6% depreciation over the past year, Meta shares fell again on Tuesday after EU authorities accused the Facebook administrator of uncompetitive online advertising practices.

Starting as a list of objections to its online ad business, Facebook Marketplace, the investigation announced by EU authorities could result in a hefty fine for blatant violations of European antitrust law.

Launched in 2016 and used in 70 countries to buy and sell goods, the Facebook Marketplace platform benefited from a substantial advantage from the outset, which was its very close connection to the social network Facebook. Clearly, competing online advertising platforms are not now able to match this advantage.

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According to European Commission Vice-President in charge of competition policy Margrethe Vestager, the link between Facebook and Facebook Marketplace means that social network users “have no choice but to have access to Facebook Marketplace”. “In addition, we are concerned that Meta has imposed unfair commercial conditions by allowing Facebook Marketplace to use data on competing online ad services. If confirmed, Meta’s practices would be illegal under our competition rules,” Vestager said in a statement.

Reacting to the allegations received from European officials, Tim Lamb, Meta’s EMEA competition director said, “The allegations made by the European Commission are baseless. We will continue to work with regulators to demonstrate that our product innovation is pro-consumer and pro-competitive.”

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This is not the first antitrust charge brought by European authorities, with the European Commission opening a similar investigation against Meta as far back as June 2021, looking into “possible anti-competitive behaviour by Facebook”.

Under European law, companies for which sufficient evidence of antitrust violations is found can be penalised by up to 10% of their overall annual revenue. In Meta’s case, the maximum fine could reach $11.8 billion, which would rival the already exorbitant investment in the Metaverse project, estimated at more than $10 billion.

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