German Competition Watchdog Orders Facebook to Stop “Unrestricted” Data Collection

FacebookGermany’s Federal Cartel Office (FCO) today ordered Facebook to change the way it collects user data and shares it between its various properties, arguing that the social media site has abused its market position to coerce users into handing out personal information without their knowledge or voluntary consent.

The ruling, which comes after a three year probe by the competition watchdog, gives Facebook twelve months to update its data policies, or face further consequences. The FCO may impose fines of up to ten percent of worldwide group turnover for the previous fiscal year where it sees fit.

The FCO takes issue specifically with how data is shared with Facebook, both by other apps owned by Facebook (such as Instagram and Whatsapp), and by third party websites. Facebook’s terms and conditions currently only let users own an account if they agree to having their data collected elsewhere and assigned to their Facebook account. But the FCO argues that people have little choice but to agree to these terms, given Facebook’s dominant market position.

“Facebook dominates the German market for social networks,” the FCO said in s statement. “With 23 million daily users and 32 million monthly users, Facebook has a market share of more than 95 percent among the daily active users and over 80 percent among the monthly active users.”

The watchdog is thus demanding that Facebook must gain explicit consent from users to have data from Whatsapp and Instagram, as well as data from other third-party apps and websites, connected with their Facebook accounts. Those users who don’t give this consent should not be denied access to Facebook.

The FCO believes these new restrictions will have significant consequences for Facebook, making it easier for other companies to compete with the social network. The FCO statement argues that “the combination of data sources has contributed significantly to Facebook creating such a unique aggregate of data on each individual user, and helped it achieve its current market power”.

“People always ask us to break up huge internet companies,” said Andreas Mundt, head of the German Federal Cartel Office. “Well what we do here today is really something like internally breaking them up.”

Facebook has responded saying it will contest the decision, arguing that it has not achieved market dominance, but faces “fierce competition in Germany”. Facebook also argues that the FCO is overstepping its mark, saying that it has updated its data policies to comply with the EU’s General Data Protection Regulation (GDPR), and that the FCO’s order “threatens to undermine this, providing different rights to people based on the size of the companies they do business with”.

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