Germany clamps down on Facebook’s data tracking

By: Jennifer D.

Facebook has been ordered to curb its data collection practices in Germany after a landmark ruling on Thursday that the world’s largest social network abused its market dominance to gather information about users without their consent.

Germany, where privacy concerns run deep, is in the forefront of a global backlash against Facebook, fueled by last year’s Cambridge Analytica scandal in which tens of millions of Facebook profiles were harvested without their users’ consent.

The country’s antitrust watchdog objected in particular to how Facebook pools data on people from third-party apps — including its own WhatsApp and Instagram — and its online tracking of people who aren’t even members through Facebook “like” or “share” buttons.

“In future, Facebook will no longer be allowed to force its users to agree to the practically unrestricted collection and assigning of non-Facebook data to their Facebook accounts,” Federal Cartel Office chief Andreas Mundt said.

Facebook said it would appeal the decision, the culmination of a three-year probe, saying the regulator underestimated the competition it faced, and undermined Europe-wide privacy rules that took effect last year.

“We disagree with their conclusions and intend to appeal so that people in Germany continue to benefit fully from all our services,” Facebook said in a blog post.

In its order, the cartel office said Facebook would only be allowed to assign data from WhatsApp or Instagram to its main Facebook app accounts if users consented voluntarily. Collecting data from third-party websites and assigning it to Facebook would similarly require consent.

If consent is withheld, Facebook would have to substantially restrict its collection and combining of data.

If Facebook fails to comply, the cartel office said, it could impose fines of up to 10 percent of the company’s annual global revenues, which grew by 37 percent to $55.8 billion last year.

Antitrust lawyer Thomas Vinje, a partner at Clifford Chance in Brussels, said the Cartel Office ruling had potentially far-reaching implications.

“This is a landmark decision,” he told Reuters. “It’s limited to Germany but strikes me as exportable and might have a significant impact on Facebook’s business model.”

Vinje said it would be tough for Facebook to persuade the court that the Cartel Office’s definition of the market for social media, and its dominance, were misguided. This is a battle that many firms have fought in court and lost, he added.

Facebook has an estimated 23 million daily active users in Germany, giving it a market share of 95 percent, according to the Cartel Office, which considers Google+ — a rival social network that is being closed down — to be its only competitor.

Mundt also expressed concern over reports that Facebook, which counts 2.7 billion users worldwide, plans to merge the infrastructure of its Messenger, WhatsApp and Instagram services.

“If I understand things correctly, this move would intensify the pooling of data,” said Mundt. “It’s not very hard to conclude that, putting it carefully, this could be relevant in antitrust terms. We would have to look at this very closely.”

Facebook has said that discussions on such a move are at a very early stage.