Meta’s new way of handling advertiser data has been approved by the UK Competition and Markets Authority. This comes ahead of the introduction of a new digital markets competition regime, which will give it more power to crack down on monopolistic behaviour by big tech companies.
As well as approving Meta’s commitments, the CMA has also closed its existing Competition Act cases into Google’s Play Store and Apple’s App Store. The authority was concerned that requiring apps on these platforms to use Google and Apple’s respective billing systems for in-app purchases would harm competition.
Google responded by proposing alternative payment options, but the CMA rejected them because they would require developers to pay higher commissions and could cause annoyance to users due to the use of pop-up screens.
The CMA said in a press release that its new regime will enable it to investigate potentially anti-competitive practices by Google, Apple and other technology companies “more comprehensively.”
These rules will “build on and leverage its experience in areas already studied, such as the mobile ecosystem, including app stores.”
See: Amazon-Anthropic merger being investigated by UK government over competition concerns
How Meta’s new ads data commitments came about
The investigation into Meta was launched in June 2021, after the CMA raised concerns about how the company’s data practices were giving the platform an unfair competitive advantage.
Originally, Mark Zuckerberg’s company allowed advertisers to opt out of having their data used to improve the marketplace’s algorithms. However, the updated rules have removed the need for this opt-in or opt-out process, ensuring a fair playing field for advertisers using Facebook Marketplace.
As of 2022, Meta had more than 10 million active advertisers on its services. The company told the CMA that in 2021 it earned between £4 and £5 billion from digital advertising in the UK, making it the largest supplier of digital display ads in the country. Thus, according to the Chapter II prohibitions of the Competition Act 1998, it has a dominant position that it cannot abuse.
Meta collects data from its single sign-in API, Facebook Login, for its digital advertising services and third-party websites. The 2021 investigation was launched to see whether Meta was using this data to give an unfair advantage to its services, including Facebook Marketplace, and violate the Competition Act.
“For example, data obtained from users’ interactions with ads on Facebook may provide Meta with information about whether a user is interested in a particular product such as trainers, which in turn may inform a decision to show that same user a listing of shoes when they open a Facebook Marketplace tab,” the CMA said in a press release.
In response to the CMA’s concerns, Meta submitted a number of commitments that will prevent it from “exploiting” its advertising customers’ data in May 2023. These include:
- Providing advertisers with the flexibility to not have their advertising data used in the development or operation of Facebook Marketplace. This includes data that shows how users engage with their ads and meta signals about which products or services a user is interested in.
- Limiting the use of advertising data that identifies advertisers to develop Meta products and reaffirming this commitment to advertisers through an official statement in its Code of Conduct.
In November 2023, the CMA accepted those commitments, but Meta voluntarily submitted a change in April 2024. The proposed change would allow Meta to limit the use of certain data from all advertisers that is being used in the development or operation of the marketplace.
See: UK regulator investigating ‘merger status’ of Microsoft and Inflection AI
This will give the company an additional way to enforce the data controls outlined in the original commitments, and all marketplace advertisers will be able to ensure their data is not being used to benefit the platform by either opting-in or opting-out.
The CMA deliberated on the various commitments in May and June this year and announced their acceptance on 20 August.
Similarly, Amazon made a number of commitments to the CMA in 2023, when an investigation concludes into whether it was abusing its power as the U.K.’s leading online marketplace. These included not using data from third-party sellers to gain an unfair advantage.
While the conflict between Meta and the UK authority ended amicably, the same cannot be said about the EU and its investigation into Meta’s potential anti-competitive practices. In July, the European Commission ruled that Meta’s ad-free subscription tiers created a “pay or consent” advertising model that violates the Digital Markets Act.
The “pay or consent” model “forces users to consent to the combination of their personal data and fails to provide them with a less personalised but equivalent version of Meta’s social network,” the Commission said.
This approach is also anti-competitive, as it leverages Meta’s dominance to limit consumer choice, making it difficult for competitors without a vast data pool to compete in providing targeted advertising services.
The DMA, established in 2022, is a European Union regulation that aims to promote fairness and competition among digital products and services.
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