Facebook is using its position as the dominant social network to illegally track users across the internet and reinforce its might in online advertising, according to the preliminary conclusions of a probe by the German competition authority published Tuesday.
If the Bundeskartellamt maintains its findings, they would represent the first major antitrust setback for the Western world’s preeminent social media company, which has used the data it harvests to become a dominant force in online advertising.
German investigators have zeroed in on how Facebook requires users who want a Facebook account to allow the social network to “limitlessly amass every kind of data generated by using third-party websites.” Facebook, they note, is able to track users, including via Instagram, WhatsApp and a wide network of “like” buttons on other websites.
“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,” said Andreas Mundt, the president of the Federal Cartel Office. Facebook may not have users’ consent to do so.
Although no fine is foreseen in the German probe, Facebook could be forced to change the terms it imposes on users.
“Our size does not allow us to create products and force people to use them” — Facebook blog
The case explores the interplay between market power and data, new territory for competition enforcers.
However, Mundt said in the case of Facebook the two issues are closely connected: “On the one hand the social network offers a free service, on the other it offers attractive advertising space, which is so valuable because Facebook has huge amounts of personalized data at its disposal.”
German investigators will now turn over the findings to Facebook to give it the chance to respond.
Facebook said it disagreed with the findings.
“The [Federal Cartel Office’s] preliminary report paints an inaccurate picture of Facebook,” wrote Yvonne Cunnane, head of data protection in a blog.
The social network juggernaut spent the bulk of its blog contesting the conclusion that it was dominant.
Many other companies offer similar services, it noted.
“A dominant company operates in a world where customers don’t have alternatives,” it said. “Taking a look at the average smartphone home screen shows that the reality is much different.”
Facebook said it did not enjoy the kind of market comfort that is typical of a dominant firm: “We’ve had to shut down apps and other features that didn’t succeed, including Slingshot, Paper, and Rooms … Our size does not allow us to create products and force people to use them.”
As for the accusation it may have broken data protection laws, the social network said it understood privacy was an “important topic.”
“We will of course comply with the General Data Protection Regulation when it comes into effect in May 2018, just as we’ve complied with other European data protection laws for many years.”
The Bundeskartellamt opened a probe in March 2016 saying it was concerned that Facebook was abusing its dominance to violate national data protection provisions.
It said today that a final decision in the case would not come before the summer of 2018.
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