Facebook Targeted By Antitrust Probes Over Marketplace Business

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Facebook Inc (NASDAQ:FB) faces antitrust investigations over its Marketplace business in the European Union and the U.K. Investigators are determining whether the social networking giant used its dominance in social media to boost the use of its Marketplace business over other online properties used to sell items.

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Facebook under investigation for Marketplace

The European Commission, the EU's executive arm, and the U.K.'s Competition and Markets Authority announced their separate investigations of Facebook today. The probes study a business strategy used by big tech companies like Facebook, Alphabet's Google and Apple, which involves using their dominance in one area of technology to expand into other areas.

For example, Amazon leveraged its position as the biggest e-commerce firm to expand into video streaming. Meanwhile, Apple used its iPhone to become one of the biggest mobile payments companies in the world with Apple Pay. Google has used its dominance as the world's most popular search engine to expand into a variety of different tech areas.

European regulators said they would begin investigating Facebook Marketplace, a service similar to eBay that's been around since 2016. Users buy and sell items on the platform. Officials want to know whether Facebook's cross-promotion of its sales platform to its more than 2 billion users gave it an unfair advantage over rivals like eBay.

More details on the probe

According to The New York Times, Margrethe Vestager, the EU's executive vice president in charge of competition policy, said today that Facebook gathers "vast troves of data" on its users' activities, "enabling it to target specific customer groups."

In a statement, she said they would study in detail whether that data provides to Facebook "an undue competitive advantage in particular on the online classified ads sector where people buy and sell goods every day, and where Facebook competes with companies from which it collects data."

Antitrust regulators in the U.K. have already been investigating Facebook's advertising practices. The competition regulator said today that it was looking at Facebook Dating in addition to Marketplace. Facebook introduced its dating service last year in Europe. The British regulator said it would team up with the European Commission for the investigation, although the two are separate from each other.

Preliminary investigation into Facebook

A Facebook spokesperson defended the social network's business practices today in a statement. The representative said Dating and Marketplace "offer people more choices and bot products operate in a highly competitive environment with m any large incumbents." The person also said they would continue to cooperate with the investigations "to demonstrate that they are without merit."

The European Commission had already begun a preliminary investigation by sending questions to the company's competitors. Facebook sued the commission last year over regulators' demands to hand over data and documents, claiming that the materials they sought were too broad and included sensitive employee information. The social network said it handed over more than 1 million documents in connection with the Marketplace probe.

Facebook is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.