German antitrust authorities ruled Thursday that Facebook was exploiting its dominance in social media in forcing users to also allow the company to collect data from other Facebook-owned services like WhatsApp and Instagram, as well as third-party websites through the "Like" and "Share" buttons.
The ruling could not only limit the value the company extracts from its own users' information but also restrict its ability to track people without a Facebook account, who now have no way of consenting to data collection.
As everyone has long suspected, WhatsApp and Instragram, after the acquisition by Facebook, are no longer two separate entities and in fact the company combines the user data of the two applications so as to make them even more attractive in the eyes of advertising providers. "The combination of data sources has contributed significantly to Facebook creating such a unique aggregate of data on each individual user and its market power could reach". Users must agree to the terms or be excluded from the social network, a hard situation that can not be considered voluntary consent, as required under the law.
The social networking giant has a month to appeal the Bundeskartellamt's ruling.
"While we've cooperated with the Bundeskartellamt for almost three years and will continue our discussions, we disagree with their conclusions and intend to appeal so that people in Germany continue to benefit fully from all our services", Yvonne Cunnane and Nikhil Shanbhag, Facebook's head of data protection in Ireland and director-associate general counsel, said in an official statement.
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The social network had been gathering "practically unrestricted" information about people by following their activities on other websites and apps such as Instagram. There's an obvious regulatory clash hollowing out one of GDPR's key tasks: the prevention of different data protection regimes across the EU.
Bundeskartellamt President Andreas Mundt said, "With regard to Facebook's future data processing policy, we are carrying out what can be seen as an internal divestiture of Facebook's data". If it fails to secure a favorable decision, Facebook will have four months to submit proposals for how to achieve compliance with the new data use requirements.
Mr Mundt said the Cartel Office's view that the lack of any alternative to Facebook and the unequal relationship between it and consumers over the handling of their data qualified as antitrust issues - a view that has been upheld in the German Federal Court.
The ruling only applies to users resident in Germany, but is likely to influence other European regulators.
Germany has declared illegal Facebook's practice of demanding user information in exchange for the right to use its services.
The ruling could affect the firm's use of the Like and Share buttons on external sites, which lets Facebook track each visitor's internet protocol (IP) address, web browser name and version, and other details that can be used to identify them. Since then Facebook has faced countless questions about its privacy practices from governments around the world. "Yet the Bundeskartellamt's decision misapplies German competition law to set different rules that apply to only one company", Facebook said in its blog.