German antitrust watchdog goes after Facebook

The Federal Cartel Office has accused the social network of abusing market dominance to gather user data without knowledge or consent.
14 January 2019

A fresh round of bad PR threatens a new start to the year. Source: AFP

Germany’s antitrust watchdog will order Facebook to cease collecting and sharing certain user data, according to the Bild am Sonntag newspaper.

The Federal Cartel Office (FCO) has been investigating Facebook since 2015 and has already accused the company of abusing its market dominance to gather data on people without their knowledge or consent.

The filing focuses chiefly on the exchange of data with third-party providers in Germany. These include Twitter, game apps and website owners, as well as the Facebook subsidiaries WhatsApp and Instagram.

The FCO plans to present the company with its ruling in the coming weeks. A Facebook spokeswoman has said that the company disputes the watchdog’s findings and will continue to defend its position.

The investigation comes following the social network’s leaks of data that affected 50 million users and its alleged involvement in the 2016 US elections and putting Facebook once again in the spotlight for the wrong reasons.

The watchdog is more likely to set a deadline for compliance, rather than insisting on immediate action, according to Reuters.

The social network could face fines up to €10 million (US$11.5 million) for non-compliance with those requests. That’s a comparative drop in the ocean for a company of its size and revenue, but the investigation doesn’t paint a positive picture for Facebook at the start of another long year ahead.

On the other hand, if Facebook is found to be in breach of the European Union’s General Data Protection Regulation (GDPR), it faces fines of up to four percent of global revenue, which could amount to more than $US 1.5 billion— a significant blow.

The inquiry could also set wheels in motion for similar investigations in other markets to follow suit. Indeed, the Irish Data Protection Commission is also launching an inquiry into a ‘number of breach notifications’ regarding the site.

The site’s ‘Like’ button, in particular, is under scrutiny with the watchdog alleging Facebook is using engagement to amass user data in an unregulated manner, without informing users of how it’s being used.

On the other side of the Atlantic, the US Federal Trade Commission (FTC) is examining Facebook’s conduct in relation to an agreement signed back in 2011, where Facebook promised to obtain clear and proper consent if it wanted to collect and share user data.

If the company violated this agreement, it could also expect a fine of more than US$1 billion, according to Professor David Vladeck, a former head of consumer protection at the FTC speaking to the Washington Post.