German cartel office investigates Facebook for suspected abuse of market power

Germany’s cartel office is investigating Facebook for suspected abuse of market power over breaches of data protection laws in the first formal probe of the social network for violating competition rules.

The watchdog said it suspected Facebook’s terms of service regarding how the company makes use of users’ data may abuse its possibly dominant position in the social networking market.

It planned to examine whether users were properly informed about how their personal data would be obtained by the company.

Facebook, the world’s biggest social network with 1.6 billion monthly users, earns revenues from advertising based on data it gathers about its users’ social connections, opinions and activities.

“For advertising-financed internet services such as Facebook, user data are hugely important,” Federal Cartel Office president Andreas Mundt said.

“For this reason it is essential to also examine under the aspect of abuse of market power whether the consumers are sufficiently informed about the type and extent of data collected.”

A Facebook spokeswoman said: “We are confident that we comply with the law and we look forward to working with the Federal Cartel Office to answer their questions.”

Co-founder and chief executive Mark Zuckerberg visited Berlin on a charm offensive last week.

EU officials have also expressed support for the view that Facebook’s use of data might expose it to regulatory action on competition grounds.

The cartel office said it was co-ordinating its probe with other EU states.

French and Irish competition regulators said they were not involved with the German case.