Yes, I’d like to be defending Meta on this one
18 November 2024 (Paris, France) — The European Union fined Meta €800m for launching Facebook Marketplace and including it as a feature within Facebook. The key quote:
“all Facebook users automatically have access and get regularly exposed to Facebook Marketplace whether they want it or not”
This is a good example of a pretty basic competition challenge:
– if you add a feature to an existing product with a lot of users, that is ipso facto unfair to anyone trying to sell the same thing without that base of users
– but those competitors might be (and usually are) large companies themselves, and the new feature might also be adding much-needed competition to that market. It might be unfair to competitors if you integrate this feature – but it might be better for users.
So, how do you trade off different kinds of competition?
– Do you just say that big companies can’t ship any new features, and must leave existing monopolists unchallenged?
– Or, are big companies allowed to ship any feature they like and leverage their existing base to squash startups?
Like all policy questions, the adult answer is – it depends. It’s complicated.
But you’d think the EU would at least try to make a case. Just a few points:
– Facebook built “Facebook Marketplace” in 2016 to provide a more convenient and easy-to-use way for people to discover, buy, and sell items at no charge. In fact, said the Bundeskartellamt (the German competition regulator) said it welcomed the “effective competition from newcomers such as Facebook Marketplace” in a previous merger decision. The Bundeskartellamt said it was providing European users “with a new choice beyond the large incumbent online marketplaces that have dominated the landscape for a long time and continue to do so”.
– The European Commission’s decision claims that Meta imposes Facebook Marketplace on people who use Facebook in an illegal “tie”. But that argument ignores several independent studies (and an internal Facebook study) the showed Facebook users can choose whether or not to engage with Marketplace – and many don’t. The reality is that people use Facebook Marketplace because they want to, not because they have to.
– While the European Commission could not find (and did not state) any evidence of harm to competitors, the Commission claims the entry and expansion of Facebook Marketplace has the “potential” to hinder the growth of large incumbent online marketplaces in the EU instead. But those very marketplaces are actually continuing to grow and dominate in the EU. Platforms like eBay, Leboncoin in France, Marktplaats in the Netherlands, Subito in Italy, Blocket in Sweden and Finn.no in Norway are formidable competitors and the market leader in many member states.
– As it has done in many previous cases (in which it has lost), the European Commission ignores empirical evidence. For the entire case to rest on a hypothetical potential to harm competition confirms that, at best, this is a case that is still searching for a coherent theory of harm.
– But worse, the real problem is that this case entirely distorts competition law. EU competition law is intended to protect the competitive process and consumers, not to preserve the established business positions of incumbent providers in the face of innovation.
I think what Meta will need to prove/can prove is that the EU is taking regulatory action against a free and innovative service built to meet consumer demand – particularly when senior European political figures are calling for the EU to be more competitive, innovative and forward-thinking.
