Meta to Hold Limit Use of Ad Data, Fearing More Regulator Crackdowns

In a strategic maneuver resembling an intricate chess game, Meta, the parent company of Facebook, has made significant assurances to antitrust regulators in the United Kingdom.

This calculated move aims to alleviate concerns surrounding the company’s potential misuse of advertising data to gain an unfair advantage in the market.

Meta’s Divestment from Giphy

Interestingly, this development aligns with Meta’s recent announcement of selling Giphy, the popular GIF platform. Acquired just three years ago for a remarkable $400 million, Giphy has now found a new owner at a significantly reduced price of $53 million.

Shutterstock picks up Giphy for $53 million after UK blocks Meta’s acquisition https://t.co/TuvWar2F72 pic.twitter.com/fzJxAP0nut

— The Verge (@verge) May 23, 2023

The sale is a result of the definitive divestment order issued by the Competition and Markets Authority (CMA) in October of the previous year. This series of events closely follows the CMA’s intervention, which prevented Microsoft’s ambitious $68.7 billion acquisition of Activision.

Navigating the Data Leverage Concern

At the heart of the matter lies Meta’s utilization of data derived from its main social network to make strategic decisions concerning Facebook Marketplace. Since its launch in 2016, this online classifieds service has revolutionized the buying and selling experience for Facebook users.

The Competition and Markets Authority (CMA) argues that Meta’s ability to extract valuable insights about user preferences from their interactions with online advertisements on Facebook gives the company an unfair advantage.

The main concern is that this manipulation enables Meta to prioritize and display more relevant items in users’ Marketplace feeds, potentially disadvantaging other advertisers on the platform.

Investigations and Meta’s Response

In June 2021, both the European Commission (EC) and the Competition and Markets Authority (CMA) launched separate but coordinated investigations into Meta’s practices. The CMA swiftly moved forward with a formal investigation, and four months later, the EC also joined the efforts.

However, there seems to be a shift in the situation, as the CMA now appears prepared to bring the case to a close after receiving specific commitments from Meta. The progress made in the investigation indicates a potential resolution on the horizon.

The European Commission (EC) and the CMA announced separate but collaborative efforts to investigate Meta on this practice in June 2021, with the CMA revealing back in August that it was proceeding with a formal investigation. The…https://t.co/hJ9OLp4b2g https://t.co/OQbdMhQLvm

— USMAN BIN KHALID (@USMANBK77) May 27, 2023

These commitments from Meta include offering advertisers the option to exclude their ad data from being utilized to improve Facebook Marketplace. Meta intends to fulfill this promise by implementing “new technical systems.”

Furthermore, Meta has committed to providing training for its staff to ensure they refrain from using advertiser data when developing new products that could directly compete with advertisers, particularly in the UK market.

This pledge demonstrates Meta’s dedication to maintaining fair competition and addressing concerns raised by regulators.

‘Minimizing Risk’: Meta’s Commitments Under Scrutiny

While the CMA has not yet officially accepted these commitments, it is leaning towards approval and is optimistic about their potential impact. If ratified, a monitoring trustee will be appointed to ensure Meta’s compliance with its promises.

Michael Grenfell, the CMA’s director of enforcement, remarked in a recently released report, “Reducing the risk of Meta unfairly exploiting the data of businesses who advertise on its platform for its competitive advantage could help many UK businesses who advertise there.” A consultation process has been initiated, and it is scheduled to conclude on June 26.

As this digital saga continues to unfold, the world eagerly awaits the outcome. If the preliminary findings are confirmed, it could mark the conclusion of the investigation and set a new precedent in terms of data privacy and advertising practices.