$13.4 billion! Meta will face the EU's first antitrust blow, the highest tech company fine in EU history

Media reports suggest that Meta Platforms may become the first tech giant to face antitrust fines from the European Union, with the fine related to Meta's market position and Facebook. The EU accuses the company of abusing its dominant position in the classified ads market by bundling Facebook Marketplace with its social network, in violation of EU antitrust rules. The EU is expected to make a decision this autumn.

The EU refers to Meta's subscription option as a "pay or agree" model - users either agree to data collection while using Meta apps for free, or pay to not share data. This service was launched last year on Facebook and Instagram in Europe.

According to media reports, EU antitrust enforcers are preparing to use new powers under the Digital Markets Act to compel Facebook to stop using data from competing ad platforms to compete with them.

The EU believes that Meta's ad-supported social media services violate the Digital Markets Act for two main reasons: 1) Users cannot choose a version that collects less data but provides the same service as the ad-supported/personalized ad version, with only two options of no ads/personalized ads. 2) Users are not allowed to exercise the right of "free consent," meaning the decision on whether to allow their personal data to be used for online advertising.

Under the upcoming EU order, regulatory authorities of the EU Commission may require Facebook to create an independent version of the classified ads platform. According to sources familiar with the matter, this would allow users to access Facebook Marketplace without logging into Facebook.

Sources familiar with the matter have indicated to the media that this decision is still in the draft stage and may change before the decision date in autumn. It is expected that the EU Commission may make a decision around September to October, before EU antitrust chief Margrethe Vestager leaves office in November, but the specific timing may be delayed.

If the antitrust decision is passed, Meta could face fines of up to $13.4 billion, accounting for 10% of its global revenue in 2023. If the penalty reaches this level, it would be the largest fine ever imposed by the EU on a tech company, as EU antitrust fines rarely reach this level. The Digital Markets Act also stipulates that for repeat offenders, this ratio could increase to 20%.

Meta spokesperson Matt Pollard stated, "The EU Commission's allegations are unfounded. We will continue to cooperate constructively with regulatory authorities to demonstrate that our product innovation benefits consumers and competition." An EU spokesperson declined to comment.

As part of the formal warning issued in December 2022, EU regulators accused Meta of imposing unfair trading terms that allowed it to use data from competitors' online classified ad services to provide services for its Marketplace platform. Last year, Meta attempted to address the EU's investigation by restricting the use of competitors' ad data for Facebook Marketplace, but this concession was rejected by EU enforcement agencies In addition to the European Union, Facebook Marketplace has also attracted the attention of other regulatory agencies, including the UK Competition and Markets Authority; media reports that the UK competition regulator has accepted similar concession proposals as mentioned above