Facebook faces antitrust probe linked to data privacy in Germany

After having a VP arrested in Brazil, Facebook is facing further legal trouble this week, this time in Europe.

A German antitrust agency says that Facebook may be using its dominant position in the social network industry to violate user data rights. The agency has initiated an antitrust probe against the social media company that will examine whether its data harvesting violates data protection laws.

The European Union has stricter data privacy laws than the United States, which has led to previous trouble for American technology companies. The new lawsuit, however, is the first antitrust probe Facebook has faced.

Where data privacy law enforcement would normally fall under the domain of Germany's Federal Commissioner for Data Protection and Freedom of Information, linking data collection to Facebook’s dominant market position means the probe will be conducted instead by the Federal Cartel Office, which handles antitrust cases.

"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, president of the Cartel Office, said in a statement.

Enforcing data privacy laws in Germany and the European Union can be a messy task. The Federal Commissioner for Data Protection, in charge of ensuring data-privacy rights in the country are respected, operate primarily at a state level, limiting resources. Their positions were also complicated after an agreement that provided guidelines for sharing data between the EU and the US was struck down by a European court in Oct. 2015. The US-EU Safe Harbor agreement had been in effect for 15 years before being struck down.

By framing the probe around antitrust laws, Germany is able to sidestep those complications. As a federal agency, the Cartel Office also has more authority and resources to tackle potential infringements found.

The antitrust investigation will focus on Facebook’s terms and conditions. Facebook users are required to sign the terms and conditions, which includes information about Facebook’s data collection, before being able to use the social network. The Cartel Office has raised concerns the current terms and conditions do not adequately explain to users “the scope of the agreement accepted by them."  

"Dominant companies are subject to special obligations. These include the use of adequate terms of service as far as these are relevant to the market," Ms. Mundt added in the statement.

"This is certainly an unusual case," Mark Watts, head of data protection at Bristows, a London-based law firm, told Reuters.

Being able to capture and track users’ data is key to Facebook’s business model. The social network uses the data to sell customized advertisements on their site, and Germany is a key market, with 22 million users, according to Statista.

In response to the probe, a Facebook spokesperson told The Christian Science Monitor: “We are confident that we comply with the law and we look forward to working with the Federal Cartel Office to answer their questions."