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Source:pkstudio, Shutterstock
Summary
- The UK competition watchdog finds evidence of fake reviews on Facebook and Instagram.
- The social media giant had removed 188 groups earlier after CMA highlighted such concern.
- The authority has also flagged competition concerns about Facebook’s acquisition of GIF website Giphy.
Facebook, Inc. (NASDAQ:FB) has removed 16,000 groups on its platform after Britain’s Competition and Markets Authority (CMA) found evidence of their involvement in fake reviews.
The CMA said it launched an investigation following reports that fake and misleading reviews are being bought and sold on social media platforms. The probe found evidence of illegal trade on both Facebook and Instagram.
This is the second intervention by CMA in recent months over the issue. Following its earlier remark on the existence of fake reviewers on social media platforms, the California-headquartered company had disabled 188 groups and 24 user accounts while e-commerce site eBay Inc. (NASDAQ:EBAY) blocked 140 users on its platform.
The two companies had also joined hands with an agreement in January 2020 to flush out the fake reviewers from their sites. The British competition watchdog had then acknowledged that the social media giant has taken proactive steps to curb the illegal trade in fake reviews.
CMA has recently instituted a Digital Markets Unit to check illegal online activities and enforce the law. As per CMA, Facebook and Google are the biggest players in the digital advertising market, constituting about 80 percent of the £14 billion spent on ads in 2019.
CMA flags Facebook’s acquisition of Giphy
In May 2020, Facebook announced that it bought New York-based animated picture platform Giphy for an undisclosed amount. The CMA, which launched an investigation into the deal, said Giphy competed with Facebook in digital advertising through partnerships with brands, such as Pepsi and Dunkin’ Donuts, and had plans to expand partnerships to the U.K.
Giphy could have “less incentive” to expand the digital advertising following the merger and it could impact the competition in the market considering Facebook’s share of over 50 percent in the display advertising market, the watchdog said.
Facebook’s share price jumped over 32 percent in 2020. During the year, the company’s revenue grew 22 percent year-over-year to US$85.97 billion. Revenue from advertising totaled US$84.15 billion, up 21 percent year-over-year.
Source: Refinitiv, Facebook share price in 2020
