Germany: The Federal Cartel Office Demands More Flexibility And Leeway For Facebook Users

Last Updated: 25 June 2019
Article by Stefan Peintinger

The Federal Cartel Office ("BKartA") has imposed far-reaching restrictions on Facebook Inc. and Facebook Germany GmbH ("Facebook") with respect to their processing of user data.

The BKartA requests Facebook to grant users the option of consenting to group-wide data processing in accordance with the GDPR instead of using general terms and conditions to justify such processing. Due to its prevailing market power in Germany, Facebook supposingly drafted these terms too rigidly, thus restricting users too heavily in an inadmissible manner.

Facebook, on the other hand, is of the opinion that the BKartA is misapplying competition law by imposing special requirements that would only apply to a single company.

The BKartA's decision is not surprising and is in line with established judicial opinions.

Considering the key performance indicators, Facebook Inc. is gaining users year over year and has established itself firmly in the everyday lives of millions and millions of Germans and at their homes. The social network Facebook, the highly popular video and photo-sharing app Instagram, and the associated messenger services (WhatsApp and Facebook Messenger) are the four most popular services among users. On average, Facebook Inc. apps account for 75% of the overall time users are spending with apps.

German market penetration is considered very high. At 23 million daily and 32 million monthly users, the social network Facebook enjoys a market share of over 95% among daily active users and over 80% among monthly active users. WhatsApp counts as many as 42 million active users daily and 46 million weekly, thus comprising almost all adults in Germany born after 1955.

In the past, these services used to be independent, therefore collecting user data and memberships independently. Due to the rapid growth of WhatsApp and Instagram, Facebook Inc. acquired these services and gained increasing market penetration over the subsequent years.

For economic reasons, in particular cost savings, efficiency, and effectiveness, the company intends to collectivize and process the currently decentralized collection of user data via a centralized approach in a single Facebook user account.

As a result, the company adopted new terms for its platforms accordingly. Users would be able to decide whether or not to use Facebook Inc. products and thus consent to the collective processing of their data. In principle, this practice would be covered by each individual's privacy. Users are supposed to make – and should be able to – make legally binding decisions in their own responsibility within the framework of the legal system.

In view of the market penetration and dominance of the most popular apps (almost all of which are part of Facebook group), however, the BKartA had to act in order to not undermine the principles of private autonomy and in order to protect users.

Facebook Inc.'s terms would restrict users too heavily in their rights, as social media and news services – in particular Facebook, Instagram, and WhatsApp – are shaping the social fabric of modern society. Rigid contractual obligations would therefore force users to choose between participating in the circle of active Facebook users or to withdraw from such interactions.

From a practical point of view, this would limit private autonomy too much. While users would be able to make a declaration of intent in their own responsibility and in a legally binding manner, this would only be possible under high social pressure and not on their own free will.

In this case, the BKartA acts in accordance with established rulings by the German Federal Court of Justice. Therefore, not only excessive prices, but also the inappropriateness of contractual provisions may constitute abusive exploitation.

Contractual provisions are appropriate where users themselves have the option to decide on the processing of their data. The BKartA does not prohibit Facebook from continuing to operate commercially and from collecting and processing data across platforms – or via third parties using cookies, pixels, and links. Such data process continue to be permissible, provided, however, that users give their consent to Facebook.

The BKartA decision has caused enormous media response. However, the decision corresponds to the usual practice by the BKartA. Therefore, the decision has been foreseeable.

We will monitor further developments. We expect this case to make its way through judicial instances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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