Meta Platforms (META) shares slumped lower Monday after European Union officials accused the social media and metaverse group of abusing antitrust rules.
The European Commission, the region's executive branch, said it has informed Meta of preliminary findings of its 18 month investigation that accuse it of distorting competition in the broader market for online classified ads. The Commission said Meta's practice of tying Facebook Marketplace to its broader social media network effectively means it's imposing unfair trading conditions on its competitors.
If ultimately found in breach of EU competition rules, the Commission could fine Meta as much as 10% of its global revenues, a figure that could reach as high as $12 billion, based on 2021 figures.
"The Commission is concerned that competitors of Facebook Marketplace may be foreclosed as the tie gives Facebook Marketplace a substantial distribution advantage that competitors cannot match," it said in a statement published Monday. "Second, Meta unilaterally imposes unfair trading conditions on competing online classified ads services which advertise on Facebook or Instagram.:
"The Commission is concerned that the terms and conditions, which authorise Meta to use ads-related data derived from competitors for the benefit of Facebook Marketplace, are unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta's platforms," the statement added.
Meta shares were marked 3.8% lower in early afternoon trading Monday to change hands at $114.92 each.
European regulators have long held U.S. tech companies in check for both anticompetitive practices and abuses of market dominance.
Google parent Alphabet (GOOGL) is appealing a $4.3 billion antitrust fine, the region's largest on record, following a 2018 ruling that that it violated antitrust rules linked to contracts with Android phone manufacturers. The group is also challenging two other penalties for favoring its Google Shopping service and abusing its dominance in online search.
Earlier this year, European lawmakers passed the Digital Services Act, broadening the scope of its remit to police illegal content on social media platforms while empowering it to fine companies as much as 6% of their annual revenues for confirmed violations.
