Germany is threatening curbs on how Facebook amasses data from millions of users in what would be an unprecedented intervention in the social network’s business model.
Andreas Mundt, head of Germany’s main antitrust agency, the Federal Cartel Office, said Facebook could be banned from collecting and processing third-party user data as one possible outcome of an investigation that in December concluded the US tech group was abusing its dominant market position.
“We are blazing a trail in this case,” Mr Mundt said in an interview. “We are looking very closely at the connection between data and market dominance, data and market power, and the possible abuse of data collection.”
The German probe goes to the heart of the way Facebook makes money from the personal data of its 2bn users and reflects growing disquiet in Europe about the influence of the big US tech groups.
The investigation focuses on how Facebook lets advertisers target online ads at particular consumers, based on information about the way they surf the internet.
In last month’s preliminary findings, the cartel office found fault with the US tech company for making use of the social network conditional on its being allowed to amass “unlimited” amounts of user-generated data from third-party websites and merge it with users’ Facebook accounts.
Facebook said it was co-operating with the German probe, but also defended its business practices. “Many websites and apps use features provided by other companies for things like embedded content and advertising,” a spokesman said. “We’re clear with people about how these tools from Facebook work and how to control them.”
The German move underlines an increasing willingness in Europe to use regulatory tools against the tech industry.
Last year the European Commission slapped a record €2.42bn fine on Google, accusing it of abusing its near-monopoly in online search. Senior figures in German media and publishing, such as Mathias Döpfner, chief executive of Axel Springer, have led lobbying efforts against Google in Brussels, both directly and through the European Publishers Council.
Brussels has also pursued Amazon over its dominance of the e-book market, and last year fined Facebook €110m for misleading the commission during its 2014 takeover of WhatsApp.
Such moves chime with a broader “techlash” against Silicon Valley. Executives from Facebook and Twitter have been grilled in Congress over their management of extremist content and how their platforms were used by Russia to meddle in the US election.
Also, in a crackdown on online hate speech, Germany passed a law last year requiring Facebook and Twitter to delete potentially illegal posts or tweets within 24 hours of notification or face fines of up to €50m.
A final decision in the German Cartel Office probe is not expected before the summer. The agency could close the case, accept commitments from Facebook, or “ban [it] from collecting and processing certain third-party user data”, Mr Mundt said.
He faulted Facebook for collecting user data “by tracking them on sites where there is merely a Facebook like or share button, even when users don’t click on it”.
“Just the fact that they are there means they’re being tracked,” he said.
Mr Mundt said there was “huge interest in the case, not only in Europe but also worldwide”, because authorities were “for the first time really going into the machine room of data-driven platforms”.
But there has been some criticism of the investigation within Germany, particularly the use of antitrust law to pursue Facebook.
Stefan Thomas, a law professor at the University of Tübingen, said: “Even if it were true that the company had violated data protection rules, it would not mean that it had abused its dominant position in the market because it is not clear how it had hindered competitors.”
Facebook has also questioned the timing of the German authorities’ move, months before the EU implements its General Data Protection Regulation, a law that introduces sweeping data protection rules.
Under the GDPR, businesses must give customers more information about which companies their data are shared with and to what end.
“With the GDPR, Europe is already putting in place strong enforcement measures that hold Facebook and other companies accountable for privacy and data protection,” a Facebook spokesman said. “We will comply with these new rules, just as we have complied with existing data protection law in Europe.”
(Published by Financial Times - January 25, 2018)