Ebay’s £7bn ads deal faces probe by competition watchdog in monopoly fears
- The CMA has started examining eBay’s £7billion deal with Norway’s Adevinta
- Ebay is selling its classified ads division that includes Gumtree and Motors.co.uk
- The CMA is scrutinising the deal because Gumtree and Motors.co.uk have millions of UK users between them
Britain’s markets watchdog has launched a full-scale investigation into eBay’s bid to create the world’s largest online business for classified ads.
The Competition and Markets Authority has started examining eBay’s £7billion deal with Norway’s Adevinta as part of a crackdown on digital monopolies.
The e-commerce giant is selling its classified ads business, which includes the hugely popular Gumtree website, to Adevinta for £1.8billion in cash and 44 per cent of the combined firm.
Probe: Ebay is selling its classified ads division that includes Gumtree and Motors.co.uk
The deal will make eBay the largest shareholder in Norway’s Adevinta, which owns online ad websites in 20 countries and books annual revenues of £1.3billion.
Adevinta is one of a string of firms that has cashed in as people spend more time online during the pandemic.
The CMA is scrutinising the deal because eBay’s classified ads unit owns both Gumtree and Motors.co.uk, which have millions of UK users between them.
The watchdog has until February 16 to finish the first stage of its investigation to determine whether the deal could substantially harm competition. The CMA could block the deal if it fears it will be detrimental for people in Britain.
The CMA has kicked off its probe amid plans to reign in digital giants and promote competition in digital advertising. It is poised to set up a digital regulator to stop tech titans from swallowing up smaller rivals – described as a ‘killer strategy’ that preserves their dominance.
The Digital Markets Unit will enforce a code of conduct on large firms such as Facebook, Google and Amazon to make sure they do not abuse their power. Tech giants face billions in fines if they break the rules. Facebook and Google could also be forced to pay news publishers for using their content.
The winds of change are definitely blowing
Susannah Streeter, investment analyst at Hargreaves Lansdown
Susannah Streeter, investment analyst at Hargreaves Lansdown, said: ‘Clearly, tech companies still want to go ahead with their deals until the regulation takes shape, and it might be deemed that in some sectors of tech there is enough competition and those deals will get waved through. But this deal will create the largest online business for classified ads, so it is not surprising that question marks have been raised with regulators.’
Regulators elsewhere are also making efforts to take on the tech titans. Facebook could be broken up after 46 US states launched a case claiming it snapped up competitors in a ‘predatory’ manner. Google faces three separate anti-trust cases filed by US states.
In China, billionaire entrepreneur Jack Ma, who has all but disappeared since late October after criticising the Chinese regime, is under pressure to dismantle his tech empire after regulators initiated probes into his companies Alibaba and Ant Group.
Streeter said: ‘The winds of change are definitely blowing through the tech industry. This has been on the cards for a while, but certainly now we are seeing regulators take a lot tougher action. In a way, regulators are just playing catch-up because for two decades we have seen this rapid change in the sector. But it’s not just the UK. We are seeing action against Facebook in the US, and in China as well we are seeing action against Alibaba.’