The European Commission has fined Meta 797.72 million Euros (£663 million) for what it says are breaches of EU competition law related to the social media giant’s classified ads service, Facebook Marketplace.

The Commission said by tying Marketplace to its Facebook social media platform, consumers on Facebook were regularly exposed to Marketplace whether or not they wanted to be, and this gave the site a “substantial distribution advantage” which over classified ad platforms could not match.

The ruling also said Meta had unilaterally imposed unfair trading conditions on other classified ads services providers who advertise on Meta’s platforms, including allowing Meta to use ad-related data generated by other advertisers for the benefit of Facebook Marketplace.

It orders Meta to bring the conduct to an end and refrain from repeating the infringement, in addition to the fine.

The Commission said that while market dominance was in itself not illegal under EU antitrust rules, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition.

Margrethe Vestager, executive vice-president of the Commission in charge of competition policy, said: “Today we fine Meta 797.72 million euros for abusing its dominant positions in the markets for personal social network services and for online display advertising on social media platforms.

“Meta tied its online classified ads service Facebook Marketplace to its personal social network Facebook and imposed unfair trading conditions on other online classified ads service providers.

“It did so to benefit its own service Facebook Marketplace, thereby giving it advantages that other online classified ads service providers could not match. This is illegal under EU antitrust rules.

“Meta must now stop this behaviour.”

In response, Meta said it would appeal the decision but would comply with the Commission’s ruling “in the meantime” and would “work quickly and constructively to launch a solution which addresses the points raised”, adding that it would “make announcements shortly to reassure our European users that Facebook Marketplace is here to stay”.

In a lengthy statement on the ruling, the US tech giant said: “Today, the European Commission announced a decision claiming that Facebook Marketplace has hindered competition for online marketplaces in Europe.

“This decision ignores the realities of the thriving European market for online classified listing services and shields large incumbent companies from a new entrant, Facebook Marketplace, that meets consumer demand in innovative and convenient new ways.

“We will appeal this decision to ensure that consumers are well served in the EU.”

The firm argued that by creating Marketplace in 2016 and allowing users to buy and sell items for no charge, it had given consumers “a new choice beyond the large incumbent online marketplaces that have dominated the landscape”, and disputed the Commission’s claim that tying Marketplace to Facebook was an illegal link.

“The European Commission’s decision claims that Meta imposes Facebook Marketplace on people who use Facebook in an illegal ‘tie’.

“But that argument ignores the fact that Facebook users can choose whether or not to engage with Marketplace, and many don’t. The reality is that people use Facebook Marketplace because they want to, not because they have to,” Meta said.

“While the European Commission could not find any evidence of harm to competitors, they claim the entry and expansion of Facebook Marketplace has the potential to hinder the growth of large incumbent online marketplaces in the EU instead.

“But those very marketplaces are actually continuing to grow and dominate in the EU. Platforms like eBay, Leboncoin in France, Marktplaats in the Netherlands, Subito in Italy, Blocket in Sweden and Finn.no in Norway are formidable competitors and the market leader in many member states.

“They have continued to report considerable commercial success, including strong financial results and growth, since Facebook Marketplace launched. Successful new entrants — such as Vinted — have also emerged and continue to grow and thrive in Europe.”

It added: “EU competition law is intended to protect the competitive process and consumers, not to preserve the established business positions of incumbent providers in the face of innovation.

“Ironically, in the name of competition, this decision does just that at huge cost to consumers.”