Meta Platforms Regulatory Developments

Investments
41

Assessment of the impact of Google’s antitrust ruling on Meta Platforms

Though Google’s antitrust ruling will mostly benefit the likes of Microsoft and OpenAI, it emboldens regulators and courts to take on Big Tech. In particular, Meta Platforms is facing a Federal Trade Commission (FTC) reopened legal suit over its acquisitions of Instagram and WhatsApp.

The ruling on Google’s monopoly of data also affects Meta Platforms in some way. For instance, a legal case wanting Meta not to give its Marketplace preferential rankings over alternatives could be launched just like what is under EU’s Digital Markets Act.

1 Like
42

I=4
UK’s competition authority accepts Meta’s changes to how it use Marketplace ad data

  • UK Competition and Markets Authority (CMA) said today that it has accepted Meta’s changes to how it uses customer data on its Marketplace.
  • Under the new proposals, Marketplace advertisers’ data will not be used to improve the marketplace without opting in.
  • The authority was investigating whether Meta hold an unfair advantage over online advertising.

Assessment
Though the decision could inform other antitrust laws facing Meta Platforms such as that launched by the EU Commission, it reduces Meta’s Marketplace moat and its ability to improve the niche’s ad algorithm.

43

I=5
A hefty EU fine on Meta for linking its marketplace with social media is expected as early as next month, but the case could take years to be completed

  • The EU Commission is likely to impose a hefty fine on Meta Platforms for dominating the ad market by linking its Marketplace with its social media network, people familiar with the matter told Financial Times.
  • Two months ago, Reuters published a similar report citing people familiar with the matter.
  • The decision is expected as early as next month before the commission’s competition boss, Margrethe Vestager leaves office.
  • If found guilty, Meta could face a penalty of up to 10% of its global turnover which was $135 billion in 2023 though the regulator usually issues a much lesser fine.
  • Meta could also appeal against the case.

Assessment

Some of the notable antitrust fines imposed by the commission include a 2016 €1.5 billion imposed on Google which was overturned today by a EU court, a 2017 €2.42 billion fine on Google which was confirmed last week by a EU court and a €4.34 billion imposed on Google in 2018 (which is under appeal) . As such, I don’t expect a fine exceeding 2 billion euros given the importance of Marketplace to Meta Platform’s revenue. Also, given that Meta will likely appeal against the fine, the case could take years to be completed.

1 Like
44

I=1

  • Irish Data Protection Commission has fined Meta €91million for inadvertently storing certain passwords of social media users in “plain text” on its internal systems.
  • The inquiry began on April 2019.

https://www.dataprotection.ie/en/news-media/press-releases/DPC-announces-91-million-fine-of-Meta

45

I=5
Meta loses an EU case challenging the use of personal data obtained outside its platforms for ad targeting

  • A European Union activist has won a suit seeking to stop Meta from using personal data obtained outside its platforms for ad targeting.

    “An online social network such as Facebook cannot use all of the personal data obtained for the purposes of targeted advertising, without restriction as to time and without distinction as to type of data,” the court said.

  • Katharina Raabe-Stuppnig, a lawyer representing the activist said the ruling will limit the amount of data that Meta can use for its targeted ads.

    “Following this ruling only a small part of Meta’s data pool will be allowed to be used for advertising — even when users consent to ads,” she said.

  • Meta said it is waiting the court’s publication but said “it takes privacy very seriously” and has put in place tools to allow users to manage how Meta uses their information.

https://abcnews.go.com/Business/wireStory/austrian-activist-schrems-wins-privacy-case-meta-personal-114492941

1 Like
46

I=8
Court allows FTC claims that Meta bought Instagram and WhatsApp so as to eliminate competition to proceed

  • A U.S. judge has ruled that Meta must face trial over FTC’s lawsuit that claims Meta bought Instagram and WhatsApp so as to eliminate competition in the social media sector.

  • The judge allowed FTC to keep a claim that states Meta overpaid for Instagram and WhatsApp in order to eliminate nascent competition but quashed the claim that said Meta restricted third-party app developers’ access to the platform unless they didn’t build apps that compete with those of Meta.

  • The trial will not allow Meta to argue that the acquisition of WhatsApp enable it to defend against competition from Apple and Alphabet.

  • The lawsuit which was initiated during Trump’s first-term is seeking to break-up Meta Platforms.

    “We are confident that the evidence at trial will show that the acquisitions of Instagram and WhatsApp have been good for competition and consumers,” a Meta spokesperson said.

  • Meta had asked the court in August to dismiss the case arguing there was lack of evidence over the FTC’s claims.

https://www.reuters.com/legal/meta-will-face-antitrust-trial-over-instagram-whatsapp-acquisitions-2024-11-13/

Assessment

The acquisition of Instagram and WhatsApp has has been a major point of contention between Meta and the FTC. Although the dismissal of Meta’s summary judgment motion is a win for the FTC, the reduction in claims further lowers the chance of a divestiture. @Magaly, you worked on the consequences of Trump’s re-election on big tech. Do you foresee him pressuring the FTC to intensify or to ease its scrutiny of companies like Meta?

2 Likes
47

Based on my earlier research with Moritz, we concluded that recent actions by Zuckerberg have shifted Trump’s stance more favorably toward him, potentially reducing personal friction and thus some political risks for Meta
It appears that Trump’s issues with Zuckerberg have been more personal than policy-driven.

In my research in the Wiki, I also concluded that breaking up Meta remains very unlikely. Antitrust cases targeting such massive companies are extremely challenging for the FTC to pursue successfully, given the agency’s limited resources compared to these corporate giants.
FTC actions seem to aim more at demonstrating the need for future regulation. Even in the Microsoft case of the 2000s, where the DOJ created a very strong case, the ultimate consequences for Microsoft were limited despite the company “losing” the case.

And also according to experts any substantial change to existing laws will be difficult to achieve and will be a very slow process, as these laws are deeply embedded in the current legal system, and embraced by the courts.
According to experts, ramping up enforcement is much harder than ramping down.

And it seems Trump is after less regulation actually, instead of more, and Lina Khan is uncertain to continue. Tough JD Vance has been praising her.

Asked about the Google case in October, Trump warned that breaking up companies can be “a very dangerous thing” because the United States did not want to lose out to China on having “great” tech companies.

Kovacic, the former FTC chair, said that many of the FTC’s efforts to craft rules under Khan are “highly reversible” and that the agency under Trump will probably hew to a “narrower conception of what the FTC role ought to be.”

I also think Trump’s concern currently is more around free speech and the perceived censorship by these big platforms, which is why he’s interested in changing Section 230. However, due to past efforts, by Trump himself, and commentary is also very unlikely to remove or change section 230. All previous reform proposals have stalled or failed, though more Republican control could slightly raise the risk of action against Section 230.

2 Likes
48

Goalwise I would put it slightly differently.

I think that Trumps desire is to strengthen his influence over the media landscape and social media and wants to achieve that platforms are either neutral and censor less misinformation (which are more frequently right-wing) or even favor right wing content in its algorithms.
(I think the second will most likely not be achieved)

Zuckerberg signaling neutrality should help a bit to bring Meta out of the line of fire as Trump wants to „reward“ people & companies he perceives as more „loyal“ and punish people who are not. (I think it’s a strategy and not personal - even though attacks are personal)
That said i believe it remains a likely scenario (probability 50%+) that Trump wants to pursue applying pressure to increase his negotiation position and power to achieve above goals but if Meta adopts a policy of censoring less I think there is no reason to harm it significantly from Trumps perspective.

All of this is speculative of course and the
more important and fundamental element of our research has been to understand the legal structure of the country and competencies of different branches of government involved and I agree with Magalys descriptions and assessments.

@Magaly How certain are you that republicans could not and will not apply increased pressure and change laws (not only section 230) now that they control senate and house?

1 Like
49

I agree that the most important thing is the legal aspect. If the laws are in favor of big tech and Trump applies pressure on FTC to go after them, those lawsuits could drag on in the courts, potentially until the next administration comes into force.

I also think that Trump wants to have more power over these companies. His appointee for attorney-general position, Matt Gaetz who had voted for a TikTok ban once called for the break-up of big tech.

2 Likes
50

I did not researched section 230 in detail as I did with the antitrust topic, because we stopped the research when I was about to get to it. So my confidence in that is not high.
Currently that assessment comes only from what happened on the past, but Trump promised more action, and I don’t doubt he will try.

And I do think that having the control increases the risks, so more research on that topic would be needed if you want to be more certain, because is completely different trying to change antitrust laws than this other, not in the process to do it, but because antitrust is a much bigger topic imo.

2 Likes
51

I=7
Meta fined €798 million by the EU antitrust commission for giving its Marketplace unfair advantage

  • EU antitrust regulator has fined Meta €798 million for tying its Marketplace to its social media network and for imposing unfair trading conditions on rivals.

  • The commission has asked Meta to stop the infringements.

    “Today we fine Meta €797.72 million for abusing its dominant positions in the markets for personal social network services and for online display advertising on social media platforms. Meta tied its online classified ads service Facebook Marketplace to its personal social network Facebook and imposed unfair trading conditions on other online classified ads service providers. It did so to benefit its own service Facebook Marketplace,” EU antitrust boss, Margrethe Vestager, said.

  • Meta said it will appeal the decision, a process that could take sveral years to complete.

Assessment
The fine was much less than I expected. Also, an appeal could take several years to complete giving Meta time to make changes to meet the antitrust laws.

2 Likes
52

What’s your take on importance? Maybe given that we have now a situation in which republicans won house and senate we should have another look or monitor developments in this direction (incl. antitrust) closely?

53

I think we should definitely monitor all actions closely, and then gradually start building the research on the wiki to be prepared, I don’t think this time is something that has to be rush currently since there is some time until law change proposals start, and market not currently focused on that.

1 Like
54

I=4
India’s competition authority ordered Meta to stop sharing WhatsApp user data with its other platforms for five years

  • India’s competition authority ordered Meta to stop sharing WhatsApp user data with its other platforms for advertising purposes for five years and a $25.4 million fine for antirust violations in 2021.
  • The 2021 antitrust violation relates to WhatsApp’s privacy policy that required users to share data with other Meta Platforms or stop using the messaging a service, an action that resulted in denial of market access for its rivals.
  • WhatsApp has more than 450 million monthly active users in the country.
  • Meta Platforms refuted the authority’s claims and said it will appeal the decision.
1 Like
55

I=6
Australia passes a bill that will ban social media for children under the age of 16

  • The Australian senate has passed a bill that will ban social media for children under the age of 16.
  • The law will come into effect in November 2025 and will fine social media companies $32 million for breaches.
  • The Australian government plans to trial an age verification technology whose findings will be reviewed in mid-2025.
  • The law sets precedence for other countries to reign on Big Tech’s influence on minors.
  • Meta, TikTok and Alphabet had criticized the bill, warning of unintended and negative consequences due to how rapidly it was drafted.
56

I=5

  • Meta said in an audit of their Digital Services Act (DSA) compliance measures, over 90% of the conclusions met the regulation with the company receiving no “adverse” conclusions.
  • Meta is currently facing a EU Commission investigation on whether it breached the DSA in areas related to child safety.
1 Like
57

I=6
EU Commission is probing Meta and Google for colluding to target minors for ads

  • The EU Commission is probing Meta and Google for going against the former’s rules related to how minors should be treated online, the Financial Times reported.
  • The probe follows Financial Time’s investigation that established Google employees were helping Meta bypass the company’s search rules on how online advertising can be directed to minors.
  • The EU Commission declined to comment on this report.
  • EU’s Digital Service Act (DSA) allows the commission to impose a fine of up to 6% of the company’s global turnover in case of such infringements.
58

I=4
Meta under investigation in Texas over children privacy and safety practices

  • Meta is one of the companies under investigation in Texas over privacy and safety practices concerning minors.
  • The investigation was launched pursuant to the Securing Children Online through Parental Empowerment (SCOPE) act which came into effect in September 2024 and can fine companies up to $10,000 per violation.
  • The investigation follows a July settlement of $1.4 billion to the State of Texas by Meta Platforms for unlawfully collecting and using facial recognition data.
1 Like
59

I=4
The EU Data Protection Commission has fined Meta Platforms 251 million euros for a 2018 data breach that impacted 29 million Facebook users globally, including 3 million from the EU.

60

I=7
US Supreme Court allows $7 billion advertising class action suit against Meta to proceed

  • The US Supreme Court declined to hear a bid by Meta to avoid class action suit by advertisers who claim the company overcharged them by inflating the number of people their ads could reach by as much as 400%.
  • The decision follows a Court of Appeals ruling against Meta in March 2024 that said the advertisers could claim damages, which they said exceeds $7 billion.
  • Meta was disputing the “common course of conduct” saying that not all advertisers were misled or affected equally.
  • Since class action suits are lengthy and costly, most of them usually end up in settlement. For instance, according to Davis Wright Tremaine, between 1997 and 2022, 46% of core federal securities class action suits were settled, 43% were dismissed, 0.5% were remanded, 0.4% went to trial and 10% were pending.
  • Similarly, some class action suits don’t end up in any payments. For example, a $5 billion data class action suit against Google settled at zero payment.
  • In 2022, Facebook paid $725 million to settle Cambridge Analytica suit from users, the largest that the company had ever paid to settle a private class action.

Assessment
Given that Cambridge Analytica had received a lot of attention, I won’t be surprised if Meta settles this class action suit for much less, especially since it has legal resources to fight the suit.

2 Likes