Facebook Faces Strict Regulation Ruling from Germany

Facebook continues to face external pressures on its data-driven ad business, this time from the European Union. The German regulatory body, the Federal Cartel Office (FCO or Bundeskartellamt) ruled that Facebook was exploiting German user’s data, essentially requiring them to allow collection of their personal data beyond the Facebook platform in order to have an account on that platform.

Even if users aren’t logged into Facebook, the social media giant can still track user data, not only through Instagram (which it owns) and WhatsApp, a popular free messaging app, but also across third party websites, appending the aggregated data to the user’s Facebook profile. After a three-year investigation, Andreas Mundt minced no words: “In the authority’s assessment, Facebook’s conduct represents above all a so-called exploitative abuse.” He continued, “[Facebook] was able to build a unique database for each individual user and thus to gain market power.”

Facebook released a statement on their blog shortly after the ruling, indicating that they disagreed with the German regulator’s assessment. The statement rejected the accusation that their presence in Germany is a dominating one, arguing instead that they face steep competition. War of words notwithstanding, Facebook has one month to appeal this ruling. If they do not, Facebook may be forced to restructure its data collection, and do so with the explicit consent of its users.

This new development indicates that Facebook’s problems goes beyond data privacy — although that is indeed a significant problem for them that isn’t going away anytime soon.

But Facebook is facing another large wrinkle: bumping up against antitrust laws. Facebook’s 32 million German users make up 80 percent of it’s market share, a staggering amount. By crowding out competition and lifting consumer data without consent to understand consumer habits in order to market to them is essentially a vicious cycle of leaving consumers little choice in their buying habits. If Germany has taken such as step to protect its citizens’ data and to enforce, antitrust laws, it may very well be that other EU countries will follow suit. The question then becomes how will Facebook respond? 

The German regulators’ stance has two far-reaching consequences. For one thing, it implies that Big Tech’s data collection practices raise anti-trust as well as privacy issues. Secondly, it threatens to undermine the possibility of creating the fabled 360 degree view of the customer, using all data available (collected with appropriate consent). If that can happen in Germany, it can surely happen across Europe, and potentially elsewhere.

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