The European Commission and UK regulators have opened antitrust investigations into Facebook over concerns its Marketplace service is unfairly distorting competition for classified ads. Both are interested in whether or not Facebook unfairly used advertising data to compete in the classified ads market, and are collaborating as part of the investigation.

“Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups,” the European Commission’s competition head Margrethe Vestager said in a statement. “We will look in detail at whether this data gives Facebook an undue competitive advantage in particular on the online classified ads sector, where people buy and sell goods every day, and where Facebook also competes with companies from which it collects data.”

In particular, the Commission says a preliminary investigation has raised concerns that Facebook may be using data from rival classified ads services that advertise on its platform to compete with them. The Commission and UK’s Competition and Markets Authority (CMA) will now carry out in-depth formal investigations to assess these concerns.

In addition to concerns about Facebook Marketplace and classified ads, the UK’s CMA is also investigating Facebook’s dating service on similar grounds.

In a statement, a spokesperson from Facebook said it believes the allegations are “without merit,” adding that both Facebook Marketplace and Facebook Dating are part of “highly competitive” markets.

“We are always developing new and better services to meet evolving demand from people who use Facebook. Marketplace and Dating offer people more choices and both products operate in a highly competitive environment with many large incumbents,” the spokesperson said. “We will continue to cooperate fully with the investigations to demonstrate that they are without merit.”

The European Commission has been scrutinizing Facebook Marketplace for years. Reuters notes that European officials sent out questionnaires about the service back in 2019, only for Facebook to push back against the investigation the following year, arguing that the scale of the EU’s document request meant it would have to hand over unrelated, yet highly sensitive information.

Launched in 2016, Facebook’s Marketplace service allows people to buy and sell items from locals. It’s now used by 800 million Facebook users across 70 countries, according to Reuters. Rivals have reportedly complained that Facebook gives itself an unfair advantage by being able to advertise Marketplace for free to its 2 billion users.

This is the first time Facebook has been formally investigated by the EU, the FT previously noted, with the case joining similar anti-competitive investigations by the bloc into the likes of Apple, Google, Amazon, and Microsoft. Earlier this year, the EU formally accused Apple of violating antitrust rules with its App Store policies, and last November the commission said Amazon was misusing the data it collects from third-party marketplace sellers.

Update June 4th, 7:03AM ET: Updated with Facebook’s statement on the investigations.

https://www.theverge.com/2021/6/4/22456313/facebook-marketplace-european-commission-formal-antitrust-investigation-eu-uk