Meta Platforms Inc., the company behind Facebook and Instagram, has been fined €797.72 million by the European Commission for anti-competitive practices linked to its integration of Facebook Marketplace.
According to EU regulators, Meta’s decision to bundle its classified ads service with the social media platform created an unfair market advantage, restricting competition in the digital marketplace sector.
Allegations and Competitive Concerns
The Commission’s investigation, which began in 2019, found that Meta automatically provided Facebook users with access to Marketplace, a move regulators said gave the company a substantial distribution boost that smaller competitors could not match.
This strategy was described as an abuse of market dominance under Article 102 of the Treaty on the Functioning of the European Union (TFEU). Margrethe Vestager, known for her rigorous enforcement against major tech firms, stated that this behavior effectively imposed trading conditions that disadvantaged rivals.
Meta, however, has rejected these allegations, maintaining that users are not obligated to engage with Marketplace and that competition in the sector remains strong, citing successful platforms like eBay, Leboncoin, and Marktplaats. In response to the ruling, Meta announced plans to appeal, arguing that the decision overlooks the competitive nature of Europe’s online classified ads market.
Ad Format Changes and Compliance Moves
On November 12, 2024, Meta rolled out a new ad format across Europe aimed at meeting EU compliance requirements. Users now have the option to view less personalized ads that only use session-based data, such as age and general location, aligning with the General Data Protection Regulation (GDPR) and Digital Markets Act (DMA). These measures are designed to reinforce user privacy and maintain competition by limiting extensive data collection.
Meta has warned that this shift could reduce ad effectiveness, potentially affecting small and medium-sized businesses that rely on targeted advertising for efficient outreach. The European market, which represents approximately 23% of Meta’s global revenue, is expected to face some disruption due to this change.
Subscription Model and Public Pushback
Earlier in 2024, Meta launched its “Pay or Okay” subscription model, giving European users an option to avoid targeted ads for a monthly fee of €9.99 on the web and €12.99 on mobile devices. The move was met with immediate criticism from consumer groups, including the European Consumer Organization (BEUC), which claimed that such a high price pressured users into allowing data tracking. In response to the backlash, Meta adjusted the subscription rates to €5.99 for individual accounts and €4 for additional accounts.
AI Data Pause and Ongoing Regulatory Challenges
Meta’s issues with EU compliance extend beyond advertising. In July 2024, the company suspended the use of European user data for training its AI models after concerns were raised about the consent process. This decision had a notable impact on Meta’s AI development, demonstrating the challenges tech companies face when balancing innovation with regulatory obligations.
Implications of the EU’s Regulatory Environment
This substantial fine marks one of the final major cases led by Margrethe Vestager, who has spent a decade pushing for accountability among the world’s largest tech corporations. Her tenure saw actions not only against Meta but also against other tech giants like Apple and Google.
The EU’s efforts, encapsulated by the introduction of the DMA and the enforcement of GDPR, aim to curb monopolistic practices and ensure a more level playing field in the digital market.
With Vestager set to depart her position, there is speculation about how the next European Commission will approach regulation, especially with potential geopolitical factors at play, such as the relationship with the upcoming Trump administration in the U.S..
The case against Meta may set a precedent for how tech companies operate under European oversight, influencing future business practices and strategies across the industry. The outcome of Meta’s appeal, expected by March 2025, will be closely watched as it may redefine the limits of regulatory power over digital market giants.
