German Antitrust Body Orders Facebook to Stop Expansive Collection of Data

The German antitrust authority, Bundeskartellamt, or the FCO, passed an order last week directing Facebook to stop its extensive collection of data of users, across its different platforms, to create a single detailed user profile. The order is significant as it is the first time an authority has pointed out how Facebook’s dominant status, and the lack of competition it faces, affects users’ privacy.

For everyone using Facebook, or any other platform owned by it (WhatsApp and Instagram), the company collects data of their activities on all these platforms and creates a single user profile with detailed information on the user’s habits and preferences. This is for the purpose of showing ads suited to each user’s likes and dislikes. In fact, the data collection also extends to third party websites that make use of Facebook analytics, or Facebook business tools, such as the Like and Share buttons.

But, as Bundeskartellamt’s statement pointed out, the data collection is not prompted when a user hits like or share button. It starts automatically as soon as a website having those buttons embedded, or using Facebook analytics, is opened.

The president of Bundeskartellamt, Andreas Mundt, stated, “By combining data from its own website, company-owned services and the analysis of third party websites, Facebook obtains very detailed profiles of its users and knows what they are doing online.”

Currently, the permission for data collection is taken in Facebook’s terms of use when a new user creates their profile. However, there is no option to choose the level of data collection a user might be comfortable with. The only two options are to either agree to the extensive and intrusive data collection, or not create an account with the social media giant. This kind of consent, Bundeskartellamt pointed out, is not real consent.

“As a dominant company, Facebook is subject to special obligations under competition law. In the operation of its business model, the company must take into account that Facebook users practically cannot switch to other social networks. In view of Facebook’s superior market power, an obligatory tick on the box to agree to the company’s terms of use is not an adequate basis for such intensive data processing. The only choice the user has is either to accept the comprehensive combination of data or to refrain from using the social network. In such a difficult situation, the user’s choice cannot be referred to as voluntary consent,” Mundt said.

In its decision, the German authority stated that Facebook, and its different services, can continue to collect data individually, as well as within the separate platforms, but these can only be consolidated into a single user profile with the user’s permission. The same permission requirement would also apply for data collection from third party websites. More importantly, Bundeskartellamt ordered that users should be able to continue using Facebook even if they refuse these permissions.

Facebook, in its response, stated that the German authority is not considering how the company complies with all GDPR (General Data Protection Regulations, applicable in the EU) rules. The tech giant also snubbed Bundeskartellamt by implying that the regulatory authority does not have the required expertise to interfere in privacy related matters.

“The GDPR specifically empowers data protection regulators – not competition authorities – to determine whether companies are living up to their responsibilities. And data protection regulators certainly have the expertise to make those conclusions,” wrote Facebook.

But the Bundeskartellamt made it clear that it is Facebook’s intrusive data collection practices that, in fact, prove its violation of antitrust laws.The authority’s statement stressed that the company’s practices were exploitative in nature, and abused its position of dominance.

“This approach based on competition law is not a new one, but corresponds to the case-law of the Federal Court of Justice under which not only excessive prices, but also inappropriate contractual terms and conditions constitute exploitative abuse (so-called exploitative business terms),” said the statement.

Facebook’s dominance of the market has placed it in a position where its current data collection practices pose a significant threat of monopolization.

“Today, data are a decisive factor in competition. In the case of Facebook, they are the essential factor for establishing the company’s dominant position. On the one hand, there is a service provided to users free of charge. On the other hand, the attractiveness and value of the advertising spaces increase with the amount and detail of user data,” Mundt concluded.

The company has a month to appeal against the Bundeskartellamt’s decision and present its arguments against the authority’s ruling, or present possible solutions to the problem. In its statement, Facebook said that it plans to do so. However, if the decision stands, Facebook will have to comply with the ruling and find a way to implement it.