Germany Orders Facebook to Cut Back its Data Collection Activities
Facebook has been ordered to curb its data collection practices in Germany following a landmark ruling that the world's largest social network abused its market dominance to gather information about users without their consent.
Privacy concerns run deep in Germany, which is at the forefront of the global backlash against Facebook, stoked up by the Cambridge Analytica scandal last year, in which tens of millions of Facebook profiles were harvested without their users' consent.
Germany’s antitrust watchdog objected strongly to the way Facebook pools data on individuals via third-party apps, including its recently acquired WhatsApp and Instagram platforms, as well as its online tracking of people, who are not even members through Facebook 'like' or 'share' buttons.
Federal Cartel Office chief Andreas Mundt commented:
"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,"
A Facebook spokesperson said the company would appeal the decision, which is the result of a three-year probe, saying the regulator underestimated the competition it faced, and undermined Europe-wide privacy rules that took effect last year.
Facebook said in a blog post:
"We disagree with their conclusions and intend to appeal so that people in Germany continue to benefit fully from all our services,"
The cartel office stated in the order, that Facebook would be allowed to assign data from WhatsApp or Instagram to its main Facebook app accounts only if users provided voluntary consent. The collection of data from third-party sites and assigning it to Facebook would also require proper consent.
If consent is not freely given, Facebook must substantially restrict its collection and combining of data and should develop proposals to do this within 12 months, subject to the outcome of appeal proceedings at the Duesseldorf Higher Regional Court, which are expected to be filed within 30 days.
The cartel office said if Facebook fails to comply it could impose fines of up to 10 percent of the company's annual global revenues, which grew by 37 percent to $55.8 billion last year.
German Justice Minister Katarina Barley welcomed the ruling, commenting:
"Users are often unaware of this flow of data and cannot prevent it if they want to use the services,
… We need to be rigorous in tackling the abuse of power that comes with data."
The German antitrust regulator's powers were expanded in 2017 to include consumer protection in public-interest cases where it could argue that a company - such as Facebook - had so little competition that consumers lack any effective choice.
Facebook has approximately 23 million daily active users in Germany. This equates to a market share of 95 percent, according to the Cartel Office, which considers Google+ (a rival social network that has been shut down) to be Facebook’s only competitor.
Facebook said the cartel office failed to recognize the extent of competition it faced from Google's YouTube or Twitter for users' attention, and also said the regulator was encroaching into areas that should be handled by data protection watchdogs.
Facebook is now considering appealing to the European Court of Justice, but here the Cartel Office is likely to have the upper hand, according to Antitrust lawyer Thomas Vinje, a partner at Clifford Chance in Brussels.
“It seems to me that the Federal Cartel Office is informed by data protections, but not dependent on them, and that it has based its decision squarely on competition law," he said.
The European Commission said they are "closely following the work of the Bundeskartellamt both in the framework of the European Competition Network and through direct contacts."
"The European legislator has made sure that there is now a regulation in place that addresses this type of conduct, namely the General Data Protection Regulation (GDPR)," it added.
Facebook said as part of its GDPR compliance, it had rebuilt the information it provides concerning people’s privacy as well as the controls they have over their information. The company added that it had also improved the privacy 'choices' on offer.
Mundt also expressed concern over reports that Facebook plans to merge the infrastructure of its Messenger, WhatsApp and Instagram services.
"If I understand things correctly, this move would intensify the pooling of data," said Mundt. "It's not very hard to conclude that, putting it carefully, this could be relevant in antitrust terms. We would have to look at this very closely."
Facebook has said that discussions on such a move are at a very early stage.
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Sources: New York Times