German antitrust office wants to limit Facebook’s data gathering

February 11, 2019

A 3-year antitrust probe into how Facebook gathers users’ data has resulted in Germany’s competition authority banning the company from combining data on users across its own array of social platforms (Facebook, Instagram, Whatsapp) without their consent.

The decision by Germany’s Federal Cartel Office, announced on February 7, also prohibits Facebook from gathering data on users from third party websites, e.g. via tracking pixels and social plug-ins without their consent.

The antitrust watchdog ruled that Facebook abused its market dominance by requiring customers to agree to data collection in order to have an account and has prohibited the practice going forward. It also objected its online tracking of people who are not even members through Facebook ‘like’ or ‘share’ buttons.

In both cases — Facebook collecting and linking user data from its own suite of services and from third party websites — the Bundeskartellamt claimed that consent to data processing must be voluntary and thus, cannot be made a precondition of using Facebook’s service.
According to Federal Cartel Office chief Andreas Mundt, “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.” Consequently, the company now must “adapt its terms of service and data processing accordingly.”

Although the decision does not yet have legal force and Facebook said it’s appealing, the company has only one month to challenge the decision before it comes into force in Germany.

In its blog post rejecting the Cartel Office’s decision, Yvonne Cunnane, head of data protection for international markets, Facebook Ireland, and Nikhil Shanbhag, director and associate general counsel, make three points to counter the decision: “The Bundeskartellamt underestimates the fierce competition we face in Germany, misinterprets our compliance with GDPR, and undermines the mechanisms European law provides for ensuring consistent data protection standards across the EU.”
In its order, the Cartel Office said Facebook would only be allowed to assign data from WhatsApp or Instagram to its main Facebook app accounts if users consented voluntarily. Collecting data from third-party websites and assigning it to Facebook would similarly require consent.

“This is a landmark decision” - Thomas Vinje, antitrust lawyer

If consent is withheld, Facebook would have to substantially restrict its collection and combining of data. It should develop proposals to do so within 12 months, which is a subject to the outcome of appeal proceedings at the Duesseldorf Higher Regional Court that should be filed within a month.
Antitrust experts describe the ruling as a landmark decision and expect that it would be tough for Facebook to persuade the court that the Cartel Office’s definition of the market for social media, and its dominance were misguided.

The remarkable part of the ruling is also how it makes clear that privacy and competition are interconnected. “This is the first instance where [regulators] are saying that because [a company has] such market power that consent is not freely given,” said Maurice Stucke, antitrust expert and law professor at the University of Tennessee.

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