Facebook has been ordered to curb its data collection practices in Germany after a ruling that the world’s largest social network abused its market dominance to gather information about users without their knowledge or consent.
- The court orders Facebook to stop collecting data without users’ and non-users’ consent
- Investigators found that Facebook has 95 per cent market share in Germany
- The tech giant will appeal, and says the court has misapplied anti-trust laws
Germany, where privacy concerns run deep, is in the forefront of a global backlash against Facebook, fuelled by last year’s Cambridge Analytica scandal in which tens of millions of Facebook profiles were harvested without their users’ consent.
The Cartel Office objected in particular to how Facebook pools data on people from third-party apps — including its own WhatsApp and Instagram — and its online tracking of people who aren’t even members through Facebook “like” or “share” buttons.
“In future, Facebook will no longer be allowed to force its users to agree to the practically unrestricted collection and assigning of non-Facebook data to their Facebook accounts,” Cartel Office chief Andreas Mundt said.
These have gone down badly with Germans, reflecting broader concerns over personal surveillance that dates back to Germany’s history of Nazi and Communist rule in the 20th century.
German Justice Minister Katarina Barley welcomed the ruling.
“Users are often unaware of this flow of data and cannot prevent it if they want to use the services,” she said.
“We need to be rigorous in tackling the abuse of power that comes with data.”
Facebook to appeal ruling
The ruling does not yet have legal force and Facebook has a month to appeal, which the social network said it would do.
“We disagree with their conclusions and intend to appeal so that people in Germany continue to benefit fully from all our services,” Facebook said in a blog post.
“The Bundeskartellamt underestimates the fierce competition we face in Germany, misinterprets our compliance with the GDPR, and threatens the mechanism European law provides for ensuring consistent data protection standards across the EU.”
Potential far-reaching effects for Facebook’s business model
In its order, the Cartel Office said it would only be possible to assign data from WhatsApp or Instagram to Facebook subject to the voluntary consent of users.
Collecting data from third-party websites and assigning it to Facebook would only be allowed if users give their voluntary consent.
If consent is withheld, Facebook would have to substantially restrict its collection and combining of data, and should develop proposals to do this within 12 months, subject to the outcome of appeal proceedings.
If Facebook fails to comply, the Cartel Office could impose fines of up to 10 per cent of annual global revenues, which grew by 37 per cent to $78.5 billion last year.
Brussels-based anti-trust lawyer Thomas Vinje of Clifford Chance said the decision had potentially far-reaching implications.
“It’s limited to Germany but strikes me as exportable and might have a significant impact on Facebook’s business model,” he said.
Facebook rebuffs market dominance claims
In response, Facebook said the Cartel Office failed to recognise that it competes with other online services, such as Google-owned video app YouTube or Twitter, the short-messaging service, for people’s attention.
Facebook has an estimated 23 million daily active users in Germany, giving it a market share of 95 percent, according to the Cartel Office, which considers Google+ — a rival social network that is being closed down — to be its only competitor.
The next most popular social media sites in Germany are Pinterest and Google’s YouTube.
It also faults the antitrust body for encroaching in areas properly dealt with by data protection regulators under the European Union’s General Data Protection Regulation (GDPR), a broad privacy regime that entered force last May.
“We support the GDPR and take our obligations seriously. Yet the Bundeskartellamt’s decision misapplies German competition law to set different rules that apply to only one company,” Facebook said on its blog.
As part of complying with the GDPR, Facebook said it had rebuilt the information it provides people about their privacy and the controls they have over their information, and improved the privacy “choices” that they are offered.
It would also soon launch a ‘clear history’ feature, which they claim will be able to show users the “information [Facebook] receive from the websites and services who use our business tools” and “disassociate it from your account”.
Mr Mundt said the Cartel Office’s view that the lack of any alternative to Facebook and the unequal relationship between it and consumers over the handling of their data qualified as antitrust issues — a view that has been upheld in the German Federal Court.
He also expressed concern over reports that Facebook, which counts 2.7 billion users worldwide, plans to merge the infrastructure of its Messenger, WhatsApp and Instagram services.
Facebook has said that discussions on such a move are at a very early stage.