Facebook’s small print may be the next big thing in European antitrust as watchdogs home in on how the world’s biggest social network collects information from users that helps generate vast advertising revenues.
Germany’s Federal Cartel Office is examining whether Facebook essentially takes advantage of its popularity to bully users into agreeing to terms and conditions they might not understand.
The details that users provide help generate the targeted ads that make the company so rich.
In the eyes of the Cartel Office, Facebook is “extorting” information from its users, said Frederik Wiemer, a lawyer at Heuking Kuehn Lueer Wojtek in Hamburg.
“Whoever doesn’t agree to the data use, gets locked out of the social network community,” he said.
“The fear of social isolation is exploited to get access to the complete surfing activities of users,” he said.
The EU’s antitrust arm has grabbed the limelight with eye-popping penalties for US technology firms it found fell foul of anti-competitive behaviour.
Last year, it ordered Apple to pay €13bn in back taxes here and last week it fined Google €2.4bn for allegedly skewing search results in its favour.
But lawyers say the Cartel Office’s probe is testing the boundaries of antitrust law — with ramifications far beyond Germany and Facebook.
It’s “more radical” than the EU’s Google case “because it asserts that privacy concerns can be antitrust concerns” and that consumers have a broader role than buyers of services in an economy, said Alec Burnside, an attorney at Dechert in Brussels.
The German probe comes as Facebook, which now has 2 billion members and made more than $27bn (€23.6bn) in revenue last year, confronts heightened regulatory scrutiny in Europe.
It’s being investigated by numerous privacy authorities over its plans to merge data with the WhatsApp messenger application, faces a court battle over data transfers across the Atlantic and was fined in May for misleading the EU in a merger review of the WhatsApp deal.
Andreas Mundt, the Cartel Office’s president, said he’s “eager to present first results” of the Facebook investigation this year.
Like the EU’s Google investigation, he said the Facebook case tackles “central questions ensuring competition in the digital world in the future”. Facebook declined to comment on the possible outcome.
Personal data is a hot topic. But in antitrust, it’s still a contentious issue the Commission has largely so far side-stepped.
That could be changing should the German regulator embolden authorities to act.
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