It’s been a tough week at Meta HQ as the European Commission slapped a new fine on the tech giant for linking Facebook Marketplace, its classified ad service, to Facebook and using non-public advertising data.

Authorities are demanding €797.72 million for Meta, which essentially gives Marketplace an unfair advantage over competing digital storefronts. The marketplace was founded in 2016 as a way for individuals to buy and sell items via social media, usually furniture.

EU says Meta violates antitrust laws, restricts competition

The commission has two main problems. The first is that “all Facebook users automatically have access to and are regularly exposed to Facebook Marketplace, whether they want it or not,” and competitors cannot achieve the same level of exposure.

The second is that competitors must consent to Meta using their data if they want to advertise on Facebook or Instagram. This data could benefit Marketplace, and the Commission says its request is “unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta platforms”.

The UK’s Competition and Markets Authority questioned Meta’s data practices, arguing that they could give Meta an unfair competitive advantage. However, the authority ended its investigate after Meta has agreed to limit the use of advertising data and to allow advertisers to opt out of the use of their data.

Margrethe Vestager, the the European Commissioner for Competition in officesaid these practices give Meta “advantages that other online classified ad service providers have not been able to match.”

“This is illegal under EU antitrust rules. Meta must stop this behavior now,” she said in press release.

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Meta’s ownership of Facebook and Instagram makes it dominant in the social media and social media digital advertising markets. While this is not illegal in itself, it does give it a responsibility not to abuse its position by restricting competition in these two markets under European law.

The Commission first opened a procedure regarding the possible anti-competitive behavior of Meta in June 2021 and issued initial charges through a Statement of objections from December 2022.

The fine was calculated taking into account the duration and severity of the infringement, as well as the respective turnovers of Meta and Marketplace. When paid, the money will go to the EU’s general budget, reducing member states’ contributions in the following year and the burden on taxpayers.

Meta to appeal fine, rejects market and ad data claims

Meta immediately responded to the Commission’s announcement, saying it would appeal the fine. Mark Zuckerberg’s company says the authority “ignores the fact that Facebook users can choose whether or not to interact with Marketplace” and that it does not use competitors’ data to benefit Marketplace, having “built systems and controls to ensure this.”

It added that the Commission “provides no evidence of competitive harm to competitors or any harm to consumers”, using eBay, Leboncoin and Marktplaats as examples of rivals still finding success. However, Meta pointed out that EU competition law does not “preserve the established commercial positions of existing suppliers in the face of innovation”.

Meta also referred to a September report by the former president of the European Central Bank Mario Draghi that requested a review to increase the competitiveness and innovation of the region, arguing that the fine contradicts these objectives. The tech giant cited this report again a few days after complying with regulatory authorities regarding its advertising practices.

Ongoing EU monitoring of Meta’s advertising practices

Vestager has long had Meta and rivals like Apple, Google and Amazon. The name of the game is to protect the digital autonomy of EU citizens and hold tech giants accountable for their data collection and privacy practices.

Much of Meta’s revenue comes directly from the clicks and targeted engagement ads on Facebook and Instagram generated. Thus, losing a segment of user data as large as the population of the EU’s 27 countries could affect their continued growth, so Meta has a financial interest in accepting the EU’s requirements. In the third quarter of this year, 23.5% of its advertising revenue was generated by European users.

Meta is currently challenging the Commission to include Marketplace and Messenger on the list of basic services of the platform which must comply with the requirements of the DMA as provided therein “an important gateway for business users to reach end users,

A company spokesman said The Verge that market should not qualify because it is a consumer-to-consumer service and Meta is not in the middle. DMA compliance means that Meta will have to comply with data sharing and interoperability rules, which could affect its competitive advantage.

Meta was too fined €110 million by the Commission in 2017 for providing misleading information during the purchase of WhatsApp three years prior. The company assured regulators that it could not automatically connect user accounts between the two platforms, but later introduced features that do.

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Over the years, the European Data Protection Commission has fined Meta several times for infringement GDPR rules based on its targeted advertising practices. In addition to DMA and GDPR, Meta must comply Digital Services Lawa set of rules designed to regulate how it is designated “Very large online platforms” manages privacy, protects its users and operates transparently.

But Meta and EU aren’t just fighting over ad data. In June, Meta has delayed the preparation of its large language models on public content shared on Facebook and Instagram in Europe after regulators suggested they may need to obtain consent from content owners. Meta AI, its frontier AI assistant, has yet to be released in bulk because of it “unpredictable” regulations..

Meta representatives, along with Spotify, SAP, Ericsson, Klarna and others, signed an open letter in September to Europe expressing concerns about “inconsistent regulatory decision-making”. The letter says that interventions by European data protection authorities have created uncertainty about the data they can use to train their AI models.