Facebook faces German antitrust privacy probe

Facebook’s data harvesting practices are facing yet another probe in Europe. This time the German federal competition authority (the Bundeskartellamt) is initiating proceedings — rather than it being a European Member State’s national data protection watchdog.

So rather than privacy regulations being the jumping off point for this latest probe of Facebook’s business practices, the company is being investigated ostensibly on antitrust grounds. But its data harvesting practices are being linked with German competition law on account of Facebook’s dominant market position in the country.

News of the investigation was reported earlier by Fortune.

The specific accusation is that Facebook is using unlawful terms and conditions related to its collection and use of user data, and given the T&Cs are a condition for access to its service the suspicion is that could constitute an abuse of a dominant market position.

“It is difficult for users to understand and assess the scope of the agreement accepted by them. There is considerable doubt as to the admissibility of this procedure, in particular under applicable national data protection law. If there is a connection between such an infringement and market dominance, this could also constitute an abusive practice under competition law,” writes the German competition authority.

“Dominant companies are subject to special obligations. These include the use of adequate terms of service as far as these are relevant to the market. For advertising-financed internet services such as Facebook, user data are hugely important. 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,” adds Andreas Mundt, president of the Bundeskartellamt, in a statement on the action.

The social network giant has faced plenty of privacy-related investigations and orders from European DPAs in recent times — including receiving a formal order from the French DPA last month to stop tracking non-users via cookies and social plug-ins; and back in summer 2015 court action from the Belgian DPA over a similar tracking issue. In the latter case Facebook later agreed to change how its site operates in the country.

The Bundeskartellamt’s move is interesting as it seeks to link similar data-protection related privacy concerns with antitrust law — which carries higher potential fines for companies found to be abusing their market position, and involves better resourced departments carrying out investigations than the over-worked, under resourced DPAs.

The German competition authority’s action is also targeting Facebook Inc., USA, the Irish subsidiary of the company and Facebook Germany GmbH, Hamburg.

In fighting privacy related actions initiated by European DPAs Facebook has typically tried to use a jurisdiction-based argument to its advantage, claiming individual member states do not have jurisdiction over its regional business, and arguing instead that it is only bound by the Irish DPA, as its European HQ is in Ireland.

Using a competition law route to press privacy concerns against Facebook may be one way for European countries to workaround that argument. 

The Bundeskartellamt’s action also follows comments made by the European Commission’s competition commissioner, Margrethe Vestager, at the start of this year in which she suggested dominant tech platforms that harvest vast amounts of personal data might in future be considered in breach of the overarching EU’s competition rules — based on their data holdings. So this is not the first time European competition authorities are linking systematic data-collection with antitrust concerns.

“If a few companies control the data you need to cut costs, then you give them the power to drive others out of the market,” Vestager told the DLD conference back in January. “If a company’s use of data is so bad for competition that it outweighs the benefits, we may have to step in to restore a level playing field,” adding that her department would “continue to look carefully at this issue”.

The Bundeskartellamt notes it is conducting its Facebook antitrust probe “in close contact with the competent data protection officers, consumer protection associations as well as the European Commission and the competition authorities of the other EU Member States”.

At the time of writing Facebook had not responded to a request for comment.