Facebook is probed by UK competition watchdog


Facebook is probed by UK competition watchdog over claims it is abusing its dominant positon by using data from millions of British users to gain unfair advantage over rival businesses

  • UK regulator Competition and Markets Authority is investigating Facebook
  • It is looking into whether US firm might be abusing dominant market position
  • Considering whether Facebook gained an unfair advantage over competitors 
  • Relates to providing services for classified ads and dating, and gathering data 

Facebook was today being investigated by Britain’s competition regulator over its collection and use of advertising data.

The Competition and Markets Authority launched an investigation into whether the company might be abusing a dominant position in the social media or digital advertising markets.

The CMA is probing whether the California-based firm has gained an unfair advantage over competitors in providing services for online classified ads and online dating, through how it gathers and uses certain data.

The regulator, based in London, told how Facebook collects data from its digital advertising services, which allow other businesses to advertise to Facebook users.

It also collects data from its single sign-on option, Facebook Login, which lets people sign into other websites, apps and services with their Facebook details.

Facebook collects data from its single sign-on option, Facebook Login, which lets people sign into other websites, apps and services with their Facebook details (file image)

Competition and Markets Authority chief executive Andrea Coscelli (pictured) said the regulator would be 'working closely with the European Commission'

Competition and Markets Authority chief executive Andrea Coscelli (pictured) said the regulator would be ‘working closely with the European Commission’

The CMA said it will look into whether Facebook has unfairly used the data gained from its advertising and single sign-on to benefit its own services.

It will focus on Facebook Marketplace – where users and businesses can put up classified ads to sell items – and Facebook Dating, which launched in Europe in 2020.

What is the CMA investigating and what powers does it have to fine Facebook? 

The Competition and Markets Authority is investigating Facebook to determine whether it is abusing its dominant position in social media or digital advertising through its collection and use of data.

The relevant competition legislation is the Competition Act 1998. The Chapter II prohibition in the Competition Act 1998 prohibits any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market, and which may affect trade within the UK.

The London-based CMA may launch an investigation under the Competition Act 1998 if it has reasonable grounds to suspect that there has been an infringement of competition law. 

If the CMA decides that Facebook breached competition law, it can impose a fine up to 10 per cent of Facebook worldwide turnover, as well as issue legally binding directions to bring the breach to an end.

In this case, ‘Facebook’ refers to the corporate group in its entirety, including Facebook UK Ltd, Facebook Ireland Limited and Facebook, Inc. (the US parent company).

The CMA insisted ‘no decision has yet been made on whether Facebook has broken the law’. 

The European Commission also today launched its own independent investigation into Facebook’s use of data, and the CMA said it will work closely with Commission on this probe.

CMA chief executive Andrea Coscelli said today: ‘We intend to thoroughly investigate Facebook’s use of data to assess whether its business practices are giving it an unfair advantage in the online dating and classified ad sectors.

‘Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice.

‘We will be working closely with the European Commission as we each investigate these issues, as well as continuing our coordination with other agencies to tackle these global issues.’

The CMA, which insisted ‘no decision has yet been made on whether Facebook has broken the law’, launched the Digital Markets Unit (DMU) in April.

The DMU has separately begun looking at how codes of conduct could work in practice to govern the relationship between digital platforms and groups, such as small businesses, which rely on these platforms to reach potential customers.

The CMA said the DMU is operating in ‘shadow’, non-statutory form, pending legislation that will provide it with its full powers.

This is the third investigation into a suspected breach of competition law the CMA has opened recently in digital markets. 

It is also investigating Google’s ‘privacy sandbox’ and Apple’s App Store.

The first of these probes is considering Google’s proposals to remove third party cookies and other functionalities from its Chrome browser.

The second is looking into Apple’s conduct in relation to the distribution of apps on iOS and iPadOS devices in the UK – in particular regarding the terms and conditions governing app developers’ access to Apple’s App Store. 

A Facebook spokesman told MailOnline today: ‘We are always developing new and better services to meet evolving demand from people who use Facebook. 

The Competition and Markets Authority is based in this building in London's Canary Wharf

The Competition and Markets Authority is based in this building in London’s Canary Wharf

‘Marketplace and Dating offer people more choices and both products operate in a highly competitive environment with many large incumbents. We will continue to cooperate fully with the investigations to demonstrate that they are without merit.’

Also today, Germany’s competition authority said it had launched a probe into Alphabet Inc’s Google news showcase, a platform which makes news available on the company’s news website.

It added that cooperation with Google could be attractive for publishers and other news providers and offer consumers better information services.

‘However, it must be ensured that this does not lead to discrimination between individual publishers,’ a statement said.

‘Nor must Google’s strong position in access to end customers leasd to a crowding out of competing offerings from publishers or other news providers.’

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