Facebook under fire as German antitrust cops target advertising model

By BLOOMBERG

BRUSSELS • Facebook Inc is on a collision course with one of Europe’s most powerful regulators as Germany’s Federal Cartel Office (FCO) attacked the way the social network giant scoops up information on how users surf to drive its advertising revenue.

Users are unaware that Facebook — seen as Germany’s dominant social network — gathers data on how they visit other websites and don’t appear to consent to how that data is used, the Federal Cartel Office, or Bundeskartellamt, said in an email statement.

People only have the choice to accept the entire package or stop using the network, it said, attacking “inappropriate” terms of service widely used by Internet sites.

The FCO says it isn’t investigating how Facebook collects information on how its users act on the social network, only on their Internet habits outside of Facebook’s walls.

Facebook generates vast revenues from serving targeted advertising to users it knows well.

German regulators may seek changes from the company, saying Facebook could now justify its conduct or “offer possible solutions” to address concerns that its data collection and use may be an abuse of its market power.

A final decision won’t come before mid-2018 and may see the FCO close the case, accept commitments from Facebook or issue an order for Facebook to cease certain behaviour.

“We are mostly concerned about the collection of data outside Facebook’s social network and the merging of this data into a user’s Facebook account,” FCO president Andreas Mundt said in the statement.

“We are not convinced that users have given their effective consent to Facebook’s data tracking and the merging of data into their Facebook account.”

Facebook immediately slammed regulators for painting an “inaccurate picture” of how it operates, honing in on the criticism that it is dominant, an important legal term that might curb future behaviour.

“Although Facebook is popular in Germany, we are not dominant,” the company said in an emailed statement.

The company said it’s working with data protection officials to handle any privacy concerns, a swipe at the FCO which is using its formidable powers as an antitrust authority to examine information concerns usually dealt with by data protection agencies with fewer tools to fine or stop companies’ actions.

Facebook’s move to merge data with its messaging app WhatsApp has been criticised repeatedly by data authorities, with France warning the company on Monday for its failure to fully cooperate with a probe.

The German case tests the limits of competition law by weighing an Internet platform’s relationship with its users and the value of the data they provide.

That may provide a template for more enforcement as other antitrust authorities and politicians seek ways to handle complaints about how Internet platforms have swelled rapidly, attracting hundreds of millions of users and grabbing advertising money that once went to newspapers and broadcasters.