German Regulators Just Obliterated Facebook’s Business Model, Citing Violations On Privacy, Data Collection

Josh West - Author

Feb. 8 2019, Updated 7:14 a.m. ET

German regulators have taken a stand against the Facebook advertising model, saying that the massive scale of data collection to which consumers must agree in order to use the free service amounts to exploitation, Wired reports. Germany’s antitrust regulator, the Federal Cartel Office (FCO), has prohibited Facebook from requiring virtually unrestricted data collection in order for a consumer to have a Facebook account.

“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 user accounts,” FCO president Andreas Mundt said in a statement.

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The regulators, who are primarily charged with matters related to monopolies and antitrust, have claimed jurisdiction over the social media giant based on their size and dominance in the German market. In Germany, Facebook has about 32 million active users — giving Facebook a market share of over 80 percent. They argue that because of Facebook’s stranglehold on the social media market, they have the ability to take advantage of users in terms of data tracking, collection, and privacy. Mundt stated that consumers had no reasonable alternative to using Facebook, leaving everyday users powerless to push back on the increasingly pervasive data practices on the platform.

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Facebook quickly responded — indicating that they will appeal the decision — saying that without the benefits afforded by such tracking, German users would not enjoy the compete Facebook experience. Without a successful appeal, Facebook will be forced to amend their data tracking and collection practices for the German market.

Antitrust experts and privacy advocates alike are taking a keen interest in these proceedings, as the decision carries with it substantial implications for both the scope of control of antitrust regulators. The ruling also concerns the ongoing battle to protect consumer privacy online, a battle currently unfolding not only in Germany, but across the EU as a whole.

“This is significant,” says Columbia Law School Antitrust Expert Lina Khan, on the move. “The FCO’s theory is that Facebook’s dominance is what allows it to impose on users contractual terms that require them to allow Facebook to track them all over,” Khan says. “When there is a lack of competition, users accepting terms of service are often not truly consenting. The consent is a fiction.”

According to Khan, previous regulatory actions have touched on similar themes, but the German regulators have better articulated the reason for their concern and their rationale for taking action.

Facebook has one month to appeal the ruling, or to make changes to their platform and ad model for German users.


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