Germany’s Federal Cartel Office orders Facebook to stop collecting user data from multiple sources

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Sang Nkhwazi

Sang is a Patent & Trade Marks Representative & Director of Franks & Co Mancunium Ltd, a firm of European Patent & Trade Marks Attorneys based in Cheadle, Stockport. The firm advises on the protection and enforcement of Intellectual Property Rights and assists with the procedures involved in obtaining protection for inventions, trade marks, designs and artistic works. You can contact him on 0161 820 2891 or email sang.nkhwazi@franksco.com
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Germany’s Federal Cartel Office, known as the Bundeskartellamt has imposed on Facebook an order with far-reaching restrictions in the processing of user data.

The announcement was made on Thursday 7th February 2019, and follows a three-year long probe that began with intensive scrutiny of Facebook over a series of privacy protection failures, including the leaking of data on tens of millions of Facebook users, and the extensive use of targeted ads purchased by state actors of countries seeking to influence US elections.

The cartel office objected to how Facebook acquires data on people from third-party apps – including its own WhatsApp and Instagram services – and its online tracking (using Facebook analytics) of people who aren’t even members of the platform.

Andreas Mundt, President of the Bundeskartellamt said

With regard to Facebook’s future data processing policy, we are carrying out what can be seen as an internal divestiture of Facebook’s data. 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 user accounts. The combination of data sources substantially contributed to the fact that Facebook was able to build a unique database for each individual user and thus to gain market power. In future, consumers can prevent Facebook from unrestrictedly collecting and using their data. The previous practice of combining all data in a Facebook user account, practically without any restriction, will now be subject to the voluntary consent given by the users. Voluntary consent means that the use of Facebook’s services must not be subject to the users’ consent to their data being collected and combined in this way. If users do not consent, Facebook may not exclude them from its services and must refrain from collecting and merging data from different sources.

That includes tracking visitors to websites with an embedded Facebook ‘like’ or share button – and pages where the company observes people even though there is no obvious sign the social network has software running in the background.

The ruling also noted Facebook’s dominant position, saying: “The company has a dominant position in the German market for social networks. With 23 million daily active users and 32 million monthly active users Facebook has a market share of more than 95% (daily active users) and more than 80% (monthly active users).” Mr Mundt went on to say:

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.

The decision stated that the extent to which Facebook collects, merges and uses data in user accounts constitutes an abuse of a dominant position. It cited the European data protection provisions as the standard for examining exploitative abuse, and noted that :  “In the authority’s assessment, Facebook’s conduct represents above all a so-called exploitative abuse. Dominant companies may not use exploitative practices to the detriment of the opposite side of the market, i.e. in this case the consumers who use Facebook. This applies above all if the exploitative practice also impedes competitors that are not able to amass such a treasure trove of data.”

The decision does not yet have legal force and Facebook has a month to appeal. The social network responded that the Cartel Office failed to recognise the competition Facebook faced from other online services, such as video app YouTube or Twitter. It said it intends to appeal the ruling, saying in a statement:

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….

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

Last year, in October, Facebook was fined £500,000 by the UK Information Commissioner, for failing to protect user data, following the Cambridge Analytica Scandal.

More details on the story can be found here (external page)

The full decision of the order can be found on the Bundeskartellamt’s website here (external page)

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