Meta fined for Facebook Marketplace’s Unfair Trading Conditions and Tying
Unfair trading conditions and tying are gaining traction as alleged abusive practices in the digital industry, as the European Commission fines Meta EUR 797.72 million for hindering competitors of Facebook Marketplace. Although certainly not new, tying seems to make a comeback as an alleged abuse. Moreover, unfair trading conditions have become a new go-to tool for competition authorities to catch various forms of perceived “unfair behaviour” by dominant digital companies.
Background
According to the Commission’s press release, Meta abused its dominant position in (i) the EEA-wide market for personal social networks and (ii) the national markets for online display advertising on social media by:
- tying its online classified ads service Facebook Marketplace to Facebook, its social network. The Commission considered that the resulting “substantial distribution advantage” for Facebook Marketplace may have foreclosed Facebook Marketplace’s competitors, since they were unable to match this advantage; and
- imposing unfair trading conditions on competing online classified ads service providers advertising on Meta’s Facebook and Instagram platforms. According to the Commission, Meta used the generated ad-related data of competing advertisers to Facebook Marketplace’s benefit.
Unlike in the UK, where the CMA accepted commitments offered by Meta to curb its use of ad data, the Commission decided to impose a EUR 797.72 million fine on Meta for both the imposition of unfair trading conditions and the abusive tying practices. Meta has stated it intends to appeal the fine at the EU courts.
'Retro' abuse
After its Microsoft decision in 2004, the Commission’s decisions in Google Android (2018) and currently in Meta show that tying has made a comeback as abusive conduct type in antitrust investigations into dominant digital companies. The Commission’s ongoing investigation into Microsoft’s potential abusive tying of its Teams service into its Windows software underlines that abusive tying is particularly a risk factor in digital markets. A good reason for digital companies to keep an eye out for the finalised version of the Commission’s guidelines on exclusionary abuses (see our September 2024 newsletter).
Similarly, the imposition of alleged unfair trading conditions is a type of abuse that is common in digital abuse investigations. Apart from the Commission’s Apple music streaming case and its current Meta case, unfair trading conditions have also caught the eye of national competition authorities over the years. See, for instance, the Meta case in Germany, the Google case in France and the Apple case in the Netherlands.
Even though the Digital Markets Act (DMA) contains provisions regulating certain trading conditions for designated gatekeepers (see our October 2023 newsletter), these types of abuse are therefore likely to continue to play a role in antitrust investigations.
Conclusion
The DMA has not lulled competition authorities to sleep. Companies in the digital sector need to be aware that the imposition of unfair trading conditions and more “retro” types of abuse such as tying are still topical in antitrust investigations.
Meta’s announced face-off at the General Court, as well as Apple’s pending appeal, will shed more light on the specific do’s and don’ts with regard to these abusive practices. The Commission’s guidelines on exclusionary abuses, once finalised, will do the same. For now, it is wise for companies to double-check sales practices as well as terms and conditions.
