Meta shares are falling after allegedly violating EU antitrust rules

Shares of Meta (META) are falling after European Union regulators issued a preliminary finding accusing the company of violating the Digital Markets Act. The antitrust issue in question is the company’s recently launched ad-supported social networking site.

Yahoo Finance reporter Dan Howley joins Catalysts to analyze the European regulator’s preliminary findings and what they mean for Meta’s future actions.

For more expert insights and the latest market action, click here to watch the full Catalysts episode.

This post was written by Nicholas Jacobino

Video Transcription

The company’s shares are under pressure this morning, down more than 2% from around 2% in the open market after the market opened here, with the company accused by EU regulators of failing to comply with groundbreaking antitrust rules over its recently launched social media service.

Yahoo funds Dan. How does he have the details for us?

It’s true, man.

These are preliminary findings.

So this doesn’t mean that anything will happen to the meta at this point.

But in essence, the European Commission is saying that meta violates the Digital Markets Act, which is basically a massive piece of EU law designed to make life difficult for big tech companies, whether it’s Apple, Microsoft, or in this case meta.

And now the European Commission, sorry, says meta is in breach of the DMA by not following certain guidelines.

And what they’re actually saying is that Meta offers two different versions of its products, Facebook and Instagram, with two different, er, rules that users must follow: either they can have Meta, er, sorry, Facebook or Instagram for free.

Uh, and let meta vacuum up your data.

Uh, it’s this kind of ad-free version, or you can buy the ad-free version, but you have to pay for it.

The European Commission says they are not the same product.

Mainly.

They say everyone has to offer a similar product.

Uh, if users don’t want their data hidden, um, in this case the meta says, well, look, we offer a similar product, but you have to pay for it.

And the European Commission says no, that it is completely different.

Users shouldn’t have to pay for this.

They also say that users have the right to freely consent to the use of their data.

So this is a big deal for the meta because they thought they would abide by the new DMA rulings.

Eh, apparently the European Commission doesn’t believe it.

And so they could earn up to 10% of their global revenues.

This would mean billions of dollars in fines, they would have to pay more.

So if the European Commission finds that they are repeat offenders (and it’s not just that), then the European Commission will also go after Microsoft, alleging that it bundles the band’s software, which gives them an unfair advantage, and Apple over its app store practices.

As you know, this is just another example of how the European Commission is putting pressure on these big tech companies.

And to some extent this is similar to what is happening in the US in terms of antitrust law.

But of course the European Commission is making faster and faster moves and more moves.