BunderKartellamt v. Facebook (February 2019)
In February 2019, the Bundeskartellamt – Federal Cartel Office (FCO) – Germany’s competition law authority, issued an antitrust ruling against Facebook. The FCO observed that because of Facebook’s dominant position on the market, users feel compelled to sign up and agree to its data handling policies regardless of the terms. It also noted that Facebook does not adequately disclose what data is collected and how it is used, making the consent, if any, provided by users not valid.
It is the first time that Facebook is being treated as a monopoly, based on the assertion that it provides a unique service for which there is no true equivalent. It is also the first case that combines privacy and competition. The FCO’s theory is that Facebook’s dominance allows it to impose on users contractual terms that allow Facebook to track them.
The FCO examined the purpose of a small pixel, known as the Facebook Pixel, that is affixed to certain pages and transmits a wide range of user data to Facebook without the need to deploy any other Facebook service. The data collected is used to serve targeted ads to users based on their IP address. The FCO found that the disclosure lacked transparency and did not provide proper notification about the company’s full scope of data collection. The FCO explained that the harm to users from the data collection is not in cost but in “loss of control”.
The FCO ordered Facebook to improve the disclosures made to German users to provide more specific information and more choices on the use of their personal data in Germany. It also required Facebook to obtain consent for all of the applicable data types and uses. This obligation affects all data collected through other sites and apps such as WhatsApp and Instagram owned by Facebook. Under the GDPR, end users must explicitly consent to some uses of their personal data. The request for consent must be separate from other terms and conditions and must be clear and unambiguous. The FCO observed that Facebook users were being asked to consent to too much by simply signing up for the service
Facebook has indicated that it will appeal the decision and will argue that the FCO does not have a basis to regulate the company because its services are free to the end user and that it is not in a dominant market position because other popular social media services (such as Snapchat, Twitter and YouTube) are direct competitors of sufficient size such that no monopoly can exist in the market.