By Sam Schechner 

The European Union is close to opening its first formal antitrust investigation into Facebook Inc., according to a person familiar with the matter, ramping up its competition enforcement of big tech companies.

The EU's top competition watchdog, the European Commission, is likely in coming weeks to open formal antitrust proceedings against Facebook, a key procedural step in one of its long-running investigations into the company, the person said, adding that the timing could still change.

The probe, which stems from complaints from competitors, looks at least in part at how Facebook allegedly favors Marketplace -- its own flea market service where users can hawk their wares, from used clothes to used cars -- at the expense of other companies that sell products through Facebook.

A European Commission spokeswoman declined to comment on the Facebook investigation.

A Facebook spokesman also declined to comment. The company has in the past said that it complies with antitrust laws.

The Commission's move toward a formal probe was first reported by the Financial Times.

A formal investigation into Facebook would be the Commission's first into the company on antitrust grounds. The EU fined the company EUR110 million in 2017 for providing misleading information during the review of its WhatsApp acquisition.

Facebook has been under investigation by the European Commission for more than a year on multiple fronts, including allegations by rival companies and politicians that Facebook has leveraged access to its users' data to stifle competition, rewarding partners and cutting off rivals. Facebook and the Commission have squabbled over access to internal documents as part of those investigations.

Facebook has said that it works in a competitive landscape and that competition enforcers must recognize that use of data is a more complicated concept than control of a finite resource.

The opening of a formal investigation is a procedural step in an EU antitrust case that can come after sometimes years of informal investigations and questionnaires to competitors and companies. If the Commission finds evidence of wrongdoing, it can then file formal charges in what is called a statement of objections.

The Commission's Facebook inquiry is part of a new wave of antitrust enforcement for the bloc. The Commission filed formal charges last month against Apple Inc. for allegedly abusing its control over the distribution of music-streaming apps, including Spotify. In November, it filed formal charges against Amazon.com Inc. for allegedly using nonpublic data it gathers from third-party sellers to unfairly compete against them. Both companies denied wrongdoing.

The EU is also pursuing informal antitrust investigations into Alphabet Inc.'s Google related to both advertising and its use of data, according to people familiar with the matter. Google has also said it complies with competition laws.

At the same time, Margrethe Vestager, who leads the European Commission's antitrust enforcement, has proposed a bill aimed at helping new tech rivals challenge big tech companies without relying on traditional, lengthy competition investigations.

The bill, dubbed the Digital Markets Act, could force digital platforms designated as gatekeepers to refrain from some potentially anticompetitive actions, such as promoting their own products over those of competitors. Companies that violate those rules could face fines of up to 10% of their annual revenue.

Write to Sam Schechner at sam.schechner@wsj.com

--Daniel Michaels contributed to this article.

 

(END) Dow Jones Newswires

May 26, 2021 10:59 ET (14:59 GMT)

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