Meta faces years of tougher antitrust oversight in Germany

Facebook’s rebranded parent, Meta, has become the next tech giant to be confirmed as subject to a special competition abuse control regime in Germany, following a 2021 update to its digital competition rules that are focused on large digital companies which are considered to be of “paramount significance for competition across markets”, as the law puts it.

The designation, which stands for five years, empowers the regulator, the Federal Cartel Office (FCO), to take faster action to respond to competition concerns linked to Meta’s operations by imposing operational conditions intended to correct antitrust abuses.

The FCO said Meta has not sought to appeal the designation — which Meta confirmed. But the social media giant told us it disagrees with some of the findings, such as that it is dominant in the market for private social networks — pointing to what it claims is vigorous competition for consumers’ attention from other social platforms such as TikTok, YouTube, Snap and Twitter.

In a statement on the designation, a Meta spokesperson said:

“While we disagree with the reasoning leading to the FCO’s decision, our focus remains on delivering the best possible experience to our users in Germany in compliance with all laws and regulations. We look forward to continuing to work constructively with the FCO.”

Back in January the FCO designated Google as the first tech giant to meet the threshold for the ex ante competition regime to apply. Shortly afterwards, the tech giant offered concessions on how it operates its news licensing product, Google Showcase, in the country as an FCO probe of Showcase’s small print (ongoing since June 2021) continued.

The FCO also has a number of extant cases pertaining to Meta’s businesses — including a pioneering decision it took back in 2019 which sought to ban Facebook from combining user data across its suite of social platforms without people’s consent. Facebook challenged the order in court, arguing that the competition regulator does not have jurisdiction over privacy related issues. Whereas the FCO argues Facebook’s consentless combining of user data to build ‘superprofiles’ for ad targeting amounts to “exploitative abuse” — a practice dominant companies must not engage in under German law.

In March last year a German court referred a number of legal questions attached to this ‘superprofiling’ case to the European Union’s top court — which has still yet to issue a judgement. So it’s likely progress on that particular antitrust intervention will remain pending the CJEU’s input regardless of Meta now being subject to the updated German competition regime, given the intervention pre-dates the amended legislation.

Since 2020, the FCO has also been investigating Meta tying use of its VR platform, Oculus, to having a Facebook account as another potential anti-competition abuse.

The FCO suggests that the designation of Meta as a company of “paramount significance for competition across markets” means it will be able to conclude such procedures faster than it would otherwise in the future — which suggests that, as the tech giant seeks to execute an already very expensive ‘pivot to the metaverse’, Germany’s regulator will be watching for any unfair manoeuvring as Meta tries to pull off this metamorphosis (and probably watching Meta’s ‘metaverse’ rather more closely than the average consumer… ).

Commenting in a statement [which we’ve translated from German with machine translation], FCO president, Andreas Mundt, said: “Thanks to the digital ecosystem created by Meta with a very large number of users, the company is the central player in the field of social media. According to our investigations, Meta is also a company of outstanding cross-market importance in terms of antitrust law. We have now formally established its position after at times contentious proceedings. Our finding puts us in a position to take action against any violations of competition law much more efficiently than we were able to do with the instruments available to date. Meta has waived an appeal against our decision.”

Tougher rules for big tech

Germany is ahead of the curve on updating digital competition rules to respond to Big Tech’s market power, which has become a source of major concern for policymakers around the world.

The European Union is in the process of similarly updating pan-EU rules to introduce an ex ante regime called the Digital Markets Act (DMA) — and EU lawmakers arrived at a political agreement on the legislation in March.

Some procedural steps remain to pass the law so the DMA is not expected to begin applying until later this year.

In recent years, the UK has also said it will legislate for a “pro-competition” reform of competition rules targeting platforms with so-called “strategic market status”. However earlier this week the Financial Times reported that the government is getting cold feet on the plan — and won’t now legislate to empower a Digital Markets Unit that was set up last year in the current parliament.

Asked about this reported delay yesterday, the Department for Digital, Culture, Media and Sport told TechCrunch it “cannot comment on timelines for potential future legislation”. But a spokesperson reiterated: “Our pro-competition regime will change the conduct of the most powerful tech firms and protect the businesses and consumers who rely on them right across the economy,” adding: “We will be responding to our consultation shortly.”

Elsewhere, Australia passed a law last year that requires Google and Facebook to engage in negotiations to remunerate local news publishers for their content to take account of how journalism is shared on their platforms.

While an earlier (2019) update to EU copyright rules has also empowered France’s antitrust regulator to go after Google over fees due to news publishers for reuse of snippets of their content. And while Google appealed the $592M antitrust fine the French regulator hit it with last year, dubbing it “disproportionate”, the tech giant also offered a series of behavioral pledges on news payments to try to settle the costly issue.