The Competition and Markets Authority (CMA) has launched a probe into whether Facebook 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 firm collects data from its digital advertising services, which allow other businesses to advertise to Facebook users, and from its single sign-on option, Facebook Login, which offers people the ability to sign into other websites, apps and services using their Facebook log-in details.
The CMA will look into whether Facebook has unfairly used the data gained from its advertising and single sign-on to benefit its own services, in particular Facebook Marketplace – where users and businesses can put up classified ads to sell items – and Facebook Dating – a dating profile service it launched in Europe in 2020.
The European Commission has today also launched its own investigation into Facebook’s use of data. The CMA will seek to work closely with the European Commission as the independent investigations develop.
Andrea Coscelli, Chief Executive of the CMA, said:
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.
As this is only the start of the CMA’s investigation, no decision has yet been made on whether Facebook has broken the law.
The CMA launched the Digital Markets Unit (DMU) in April. Separately from this new investigation into Facebook’s use of advertising market data, the DMU has 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 DMU is operating in ‘shadow’, non-statutory form, pending legislation that will provide it with its full powers. Ahead of this, the CMA will continue its work promoting competition and the interests of consumers in digital markets, including taking enforcement action where necessary.
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 AppStore.
Notes to editors
The competition legislation relevant to the CMA’s investigation 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 United Kingdom.
The 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% of Facebook worldwide turnover, as well as issue legally binding directions to bring the breach to an end.
“Facebook” refers to the corporate group in its entirety, including Facebook UK Ltd, Facebook Ireland Limited and Facebook, Inc. (US parent company).
This investigation has been launched following CMA’s digital work including its online platforms and digital advertising market study and the digital markets taskforce. The CMA found in its market study that Facebook had market power in social media and digital display advertising.
Facebook’s single sign-on service is an authentication service available to third party websites and apps as a quick way of enabling users to create an account and sign in using their Facebook Login details. This is delivered through a form of software known as an Application Programming Interface (API).
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