In a bid to alleviate UK antitrust concerns, Meta, Facebook’s parent company, has made significant assurances to regulators. The tech giant is addressing how it utilizes advertising data to bolster its own products, particularly the Facebook Marketplace.
Meta’s Commitment to Fair Play
Meta’s move comes in the wake of selling its GIF platform, Giphy, for $53 million, three years after purchasing it for $400 million. This sale followed a final divestment order from the Competition and Markets Authority (CMA) in the UK. The CMA also recently thwarted Microsoft’s $68.7 billion bid for Activision.
The crux of the issue lies in how Meta leverages data from its core social network to make content display and recommendation decisions in Facebook Marketplace. This online classifieds service, launched in 2016, enables Facebook users to buy and sell virtually anything. The CMA argues that Meta’s ability to glean insights on users’ interests through their online ad interactions on Facebook gives it an unfair advantage. This advantage allows Meta to display more relevant items in users’ Marketplace feed, potentially to the detriment of advertisers elsewhere on the platform.
Regulatory Scrutiny and Meta’s Response
In June 2021, the European Commission (EC) and the CMA announced separate but collaborative efforts to investigate Meta’s practices. The CMA proceeded with a formal investigation in August, and the EC followed suit four months later. However, the CMA has now indicated that it might drop the case after receiving specific commitments from Meta.
These commitments include allowing advertisers to opt-out of their advertising data being used to develop Facebook Marketplace. Meta plans to implement new technical systems to facilitate this. Additionally, Meta has pledged to train its staff to ensure they don’t use advertiser data when developing new products for use in the UK market that may directly compete with advertisers.
Reducing Risk and Ensuring Compliance
While the CMA hasn’t officially accepted these commitments yet, it has hinted that it will. If it does, a monitoring trustee will be appointed to ensure that Meta adheres to its commitments. “Reducing the risk of Meta unfairly exploiting the data of businesses who advertise on its platform for its own competitive advantage could help many UK businesses who advertise there,” wrote Michael Grenfell, the CMA’s director of enforcement, in a recent report.
What’s Next for Meta and Facebook Marketplace?
This latest announcement initiates a month-long consultation period which will conclude on June 26. If the CMA’s provisional findings are upheld, this will effectively end the investigation. This development could have significant implications for Meta and its operation of Facebook Marketplace, potentially setting a precedent for how tech giants use ad data to boost their own services.
As Meta navigates these regulatory waters, the future of Facebook Marketplace and its use of ad data remains to be seen. However, Meta’s commitment to addressing these concerns and its plans to implement new systems and training indicate a willingness to adapt and ensure fair competition.
