The Bundeskartellamt (“FCA”) has informed Facebook of its preliminary legal assessment in the abuse of dominant position proceedings which the authority is conducting against Facebook since March 2016. Based on the current stage of the proceedings, the authority assumes that Facebook is dominant on the German market for social networks.FCA holds the view that Facebook is abusing this dominant position by making the use of its social network conditional upon its being allowed to collect every kind of data generated by using third-party websites and merge it with the user’s Facebook account. These third-party sites include primarily services owned by Facebook such as WhatsApp or Instagram, and secondly are present in German websites and apps of other operators with embedded Facebook APIs. API are indeed at the origin of FB’s strength to be able to arouse the user/ consumer with commercial offers.
The FCA frequently conducts its abuse of dominance proceedings (that is in the beginning) with an administrative proceeding rather than a fine proceeding. Administrative proceedings are more appropriate for complex cases that raise difficult legal and economic questions, and for pilot proceedings to clarify the interpretation of the law in a (new) case constellation. The main objective of such proceedings is not to impose a fine (immediately) but to re-establish pro-competitive conditions as fast as possible. However, the FCA may, very well decide to initiate a fine proceeding in the case of recurrent abusive behaviour or in cases with a high potential for significant harm.
In the current FB proceeding the FCA examines (mainly)the terms and conditions Facebook is enforcing with regard to data from third party sources.
Social networks are data-driven products. Where access to the personal data of users is essential for the market position of a company, like FB, the question of how that company handles the personal data of its users is no longer only relevant for data protection authorities. It becomes a relevant question for the competition authorities, too.
The legislator has acknowledged this relevance and in § 18(3a) of the German Competition Act made access to personal data a criterion for market power, especially in the case of online platforms and networks. Monitoring the data processing activities of dominant companies is therefore an essential task of the competition authority which cannot be fulfilled by a data protection authority. In its assessment of whether FB’s terms and conditions on data processing are unfair, the competition authority does, however, take into account the legal principles of data protection laws. For this purpose, the FCA works closely with data protection authorities.
The current FB proceeding examines the terms and conditions Facebook is enforcing with regard to data from third party sources. These are on the one hand data generated by the use of services owned by Facebook, such as WhatsApp or Instagram, and on the other data generated by the use of third party websites and apps. If a third-party website has embedded Facebook products such as the ‘like’ button or a ‘Facebook login’ option or analytical services such as ‘Facebook Analytics’, data will be transmitted to Facebook via APIs the moment the user calls up that third party’s website for the first time. These data can be merged with data from the user’s Facebook account, even if the user has blocked web tracking in his browser or device settings. In the FCA’s preliminary assessment, Facebook’s terms and conditions in this regard are neither justified under data protection principles nor are they appropriate under competition law standards.
With the current proceeding the FCA is not examining the use of data generated by the use of Facebook’s social network itself. Whether Facebook’s use of such data violates data protection rules and is possibly also an abusive practice has so far explicitly not been the subject of FCA’s investigations.
Does Facebook have a dominant market position?
The FCA’s preliminary findings are that Facebook has a dominant market position in the German market for social networks. Facebook has around 30 million users per month in Germany of which 23 million use Facebook on a daily basis.
Facebook has superior access to the personal data of its users and other competition-relevant data. Because social networks are data-driven products, access to such data is an essential factor for competition in the market. The data are relevant for both, the product design and the possibility to monetise the service. If other companies lack access to comparable data resources, this can be an additional barrier to market entry.
Where is the harm for users and for competition?
FB offers its service for free. Its users therefore do not suffer a direct financial loss from the fact that FB uses exploitative business terms. However, the damage for the users lies in a loss of control: they are no longer able to control how their personal data are used. FB’s users tend not to pay attention ( do not register) as to which data from which sources are being merged to develop a detailed profile of them and their online activities.
The German anti trust authority will not take its decision right away..A decision is not expected before early summer 2018.
(exctracts from Bundeskartellamt’s press release from Bundeskartellamt ‘s website, December 19.2017)