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Facebook Faces Big Penalty for Breaching Obligations: What Can We Learn from This?

Updated: Apr 22, 2023


Facebook, one of the world's largest social media platforms, has been in the news lately for all the wrong reasons. The platform is facing a huge penalty for violating its obligations under the Competition and Markets Authority (CMA) in the UK. The CMA has accused Facebook of breaching consumer protection laws and abusing its market dominance, leading to a hefty fine.


The penalty, which amounts to £50 million, is the largest fine ever imposed by the CMA for a single company. The fine is part of a settlement reached between Facebook and the CMA, following an investigation into the platform's acquisition of Giphy. According to the CMA, Facebook failed to disclose important information related to the acquisition, which gave it an unfair advantage in the market.


Which Obligations were Breached?

Facebook's breach of obligations primarily relates to its failure to provide accurate and complete information to the CMA during its investigation into the acquisition of Giphy. Under the terms of the CMA, companies are required to provide complete and accurate information during investigations into potential breaches of competition law. Facebook, however, failed to do so, leading to the penalty.


Furthermore, Facebook was also accused of abusing its market dominance by making it difficult for other companies to compete with it. The platform's acquisition of Giphy, which is a popular animated image search engine, has been criticized for potentially reducing competition in the market.


What Can We Learn from This?

The Facebook penalty serves as a reminder that even large and powerful companies are not above the law. It highlights the importance of complying with obligations and providing complete and accurate information during investigations. Companies should take steps to ensure that they understand their obligations under relevant laws and regulations, and take measures to comply with them.


Additionally, the Facebook penalty underscores the importance of fair competition in the market. It serves as a warning to companies that engaging in anti-competitive behavior can have serious consequences, both in terms of financial penalties and reputational damage.


Takeaways:

The Facebook penalty is a stark reminder that companies have a duty to comply with their obligations and to ensure that they do not engage in anti-competitive behavior. Companies should take proactive measures to understand their obligations and to comply with them, in order to avoid potential penalties and reputational damage.


References:
  1. BBC News. (2021). Facebook fined £50m for breaching competition rules. Retrieved from https://www.bbc.com/news/technology-63635380

  2. UK Government. (n.d.). Competition Act 1998. Retrieved from https://www.legislation.gov.uk/ukpga/1998/41/contents

  3. Competition and Markets Authority. (n.d.). Competition law and cartels. Retrieved from https://www.gov.uk/government/publications/competition-law-and-cartels

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