Facebook’s EU/UK monopoly probe is the latest Big Tech battleground | #facebookdating | #tinder | #pof


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Facebook CEO Mark Zuckerberg, shown testifying in Washington D.C. before the House Financial Services Committee, is no stranger to his company facing pushback from countries. /Mandel Ngan/AFP

Facebook CEO Mark Zuckerberg, shown testifying in Washington D.C. before the House Financial Services Committee, is no stranger to his company facing pushback from countries. /Mandel Ngan/AFP

Friday’s announcement that Facebook is to be investigated by EU and UK competition authorities brings the latest in a series of antitrust probes by European watchdogs into Big Tech companies, with previous investigations into Amazon, Apple, Google and Microsoft.  

The European Commission is currently focusing on Facebook’s use of data for its Marketplace classified-ads service, but retains the option to extend its scope into other areas. The UK’s Competition and Markets Authority (CMA), which “will seek to work closely with the European Commission as the independent investigations develop,” is already examining not just Marketplace but Facebook Dating, which launched in Europe last year. 

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Facebook has said it would cooperate fully to prove that both investigations are “without merit.”

The CMA says that Facebook collects data through its digital advertising service as well as its single sign-on option, which allows people to sign into other websites, services and apps via their Facebook log-in details.

 

The EU vs Big Tech

It is the first antitrust probe the EU has launched into the world’s largest social network, but Facebook is just one of many Big Tech companies under scrutiny. 

“In today’s digital economy, data should not be used in ways that distort competition,” said European Competition Commissioner Margrethe Vestager. 

There are three main areas in which European watchdogs confront Big Tech companies: tax, monopoly and privacy. And there’s a long history of complaints and cases – including several intra-bloc disagreements. 

 

Tax practises

Big Tech companies save an estimated $500bn a year by shifting profits from higher-tax countries to lower-tax regions, but in February this year, EU member states backed legislation for a country-by-country breakdown of multinationals’ tax payments. (Today’s G7 agreement on tax reform is intended to tackle this issue on a global scale).

However, last month the European General Court overturned a 2017 European Commission ruling that Amazon should repay $300m of what the Commission had called “illegal state aid” tax benefits from Luxembourg. Similarly, in April 2020 the General Court overturned a Commission order for Apple to pay Ireland $15.5bn in unpaid taxes.

 

Big Tech companies have faced many attempts to control their power. /Damien Meyer/CFP

Big Tech companies have faced many attempts to control their power. /Damien Meyer/CFP

 

Besides bloc action, individual countries sometimes take tech firms to task. In September 2019, Google agreed to pay French authorities $510m in back taxes plus a $549m fine. 

But tax-minimization practices remain: just this week it was revealed that an Irish subsidiary of Microsoft, whose year-end profit to June 2020 of $315bn was equivalent to three-quarters of the country’s gross domestic product, paid no corporation tax as it is “resident” for tax purposes in Bermuda. 

 

Monopoly

Facebook now joins other Big Tech firms in being investigated for alleged monopolistic practices. In April this year, an EU antitrust case alleged Apple distorts competition in the music streaming market, following an initial complaint by rival Spotify.

Google has already been hit with almost $10bn in EU fines. A 2017 investigation into Google Shopping levied a fine of $2.9bn, a 2018 probe of the Android smartphone operating system cost Google $5.2bn, and in 2019 advertising violations prompted a $1.8bn fine.

The high cost reflects the growing importance and power of Big Tech. Way back in 2004, the EU levied what was its largest-ever financial punishment on any company after finding Microsoft guilty of a “near monopoly” with its Windows operating system, fining the U.S. tech giant $611 million – a punishment regularly surpassed since.

 

Privacy

Frequently, monopoly investigations center on the use of private data – such as the Commission’s 2019 probe into Amazon‘s use of data from independent retailers using its platform. 

This March, French start-up lobby group France Digitale filed a complaint with the national privacy regulator against Apple, claiming the iOS 14  operating system collects ad user data without explicit consent. 

Last November, privacy campaigner Max Schrems filed cases in Spain and Germany against Apple’s Identifier for Advertisers technology tracking users across apps. Amazon was also sued in Germany last October over claims that it continued to transfer data to the U.S. via a mechanism called Privacy Shield, which the Court of Justice had banned in the EU. 

Finally, the EU’s penetrating gaze can also fall upon itself. In May 2021, the European Data Protection Supervisor ordered investigations into whether EU institutions’ use of cloud services from Amazon and Microsoft fall foul of the Court of Justice’s ruling on Privacy Shield.

 

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