Facebook Investigated in Germany for Market Abuse

Facebook is being investigated in Germany for suspected abuse of its dominant market position.

Germany’s federal cartel office suspects Facebook’s privacy terms violate data protection laws.

The German authorities are looking into whether Facebook’s “dominance” means those terms also constituted an abuse of market power. The formal probe is the first of its kind the social network has faced.

Facebook said it was confident it complied with the law.

“Dominant companies are subject to special obligations,” said Andreas Mundt, the president of the cartel office.

“These include the use of adequate terms of service as far as these are relevant to the market

“For advertising-financed internet services such as Facebook, user data are hugely important.

“For this reason, it is essential to also examine under the aspect of abuse of market power whether the consumers are sufficiently informed about the type and extent of data collected.”

Andreas Mundt’s investigation would focus on Facebook’s US operation, as well as its German and Irish subsidiaries, the cartel office said in a statement released on March 2.

The investigation found that Facebook was dominant in the social media market and relied on advertising revenues generated on the basis of a “large amount of personal user data”.

Users had to agree to this collection of data as a condition of their being able to use the network.

“It is difficult for users to understand and assess the scope of the agreement accepted by them,” it said.

“There is considerable doubt as to the admissibility of this procedure, in particular under applicable national data protection law.

“If there is a connection between such an infringement and market dominance, this could also constitute an abusive practice under competition law.”

A Facebook representative said: “We are confident that we comply with the law, and we look forward to working with the Federal Cartel Office to answer their questions.”

The German authorities are working in “close contact” with the European Commission, the competition authorities of the other EU member states and data and consumer protection officers.

European Commission spokesman Ricardo Cardoso said the EU executive shared the view of the German cartel office that the mere infringement of data protection rules by a dominant company did not automatically amount to a competition violation.

“However, it cannot be excluded that a behavior that violates data protection rules could also be relevant when investigating a possible violation of EU competition rules,” Ricardo Cardoso added, while declining specific comment on the new case.

Speaking in Germany in January, the European commissioner for competition Margrethe Vestager said her agency was taking a harder look at whether the collection of vast amounts of consumer data by big internet companies violated competition rules.