Germany’s antitrust watchdog is preparing to take action against Facebook, after accusing the tech giant of abusing its monopoly power in its user data collection practices. The German-language Bild am Sonntag newspaper reported on Sunday that the German Federal Cartel Office, or Bundeskartellamt, which regulates industry competition, would submit a ruling to the tech giant in the coming weeks containing further details.
This is the latest step in a four-year investigation of Facebook by the German regulator, which had already accused the industry giant of maintaining an illicit data-collection policy. This latest round of findings will apply mostly to Facebook’s practice of sharing data between other platforms like Twitter and the Facebook-owned Instagram and WhatsApp social media platforms.
The watchdog’s investigation of Facebook has drawn international attention amid an atmosphere of increasing public anxiety over the practices of titan tech companies like Facebook and Google. In late October, Facebook announced that it had detected a breach of some 50 million users’ accounts, during which hackers were granted access to passwords and private information, as well as to the accounts themselves, from which they could have made posts and directed site traffic. That was only the latest scandal in a laundry list of complaints against the company, which has also been accused of failing to defend against coordinated efforts to manipulate elections and spread fake news stories.
After the notorious Cambridge Analytica scandal, during which the company was found to have sold data from approximately 87 million users to a massive political consulting firm connected to Robert Mercer and the Trump campaign, investigations were opened by a number of countries in the company’s violation of data privacy laws. Other dubious practices, like granting other tech and e-commerce companies such as Amazon and Microsoft access to user data, have inspired a probe from the U.S. Federal Trade Commission that threatens to end in a multi-billion dollar fine for Facebook.
The Washington D.C. attorney general’s office likewise filed a lawsuit against Facebook towards the end of December, accusing the company of “lax oversight and enforcement of third-party applications” culminating in the Cambridge Analytica scandal. The suit alleges that Facebook failed on a number of counts to protect user privacy, violating over and over again the D.C. Consumer Protections Act. What’s more, it accuses the company of deliberately misrepresenting its policies in public. “Facebook could have prevented third parties from misusing its consumers’ data had it implemented and maintained reasonable oversight of third-party applications consistent with its representations in its public statements, terms of service, and policies.”
The Federal Cartel Office’s probe reportedly zeroed in on Facebook’s practice of collecting the data of people using websites and applications outside of the company’s platform. Such efforts, the regulator has argued, are part of Facebook’s larger practice of manipulating its far-reaching market control to collect and sell user data without people’s understanding.
The case, however, will be a test of the regulatory power of government apparati in the face of increasingly-consolidated tech companies. “We are conscious that this should, and must, go quickly,” said the organization’s president, Andreas Mundt, back in August. Despite the cartel office’s emphasis on a swift timeline, it is yet unclear whether they will demand that Facebook take immediate action to bring its policies to compliance. The likelihood, according to the report in Bild am Sonntag, is that the watchdog will set a deadline for Facebook to reform its practices.
A big problem, however, is that any potential fine the company may face will most likely be quite small, compared to the tech giant’s over-400 billion dollar market valuation. The fine ultimately imposed by the Federal Cartel Office if Facebook fails to comply will likely be as little as 10 million euros, or even less.
Facebook, which has spent the last year fending off international outrage and user concerns, has rejected the latest report on the German watchdog’s conclusions and insisted that its current policies are designed to protect user privacy.
“Since 2016, we have been in regular contact with the Bundeskartellamt and have responded to their requests,” said a company spokesperson in a statement. “As we outlined publicly in 2017, we disagree with their views and the conflation of data protection and antitrust laws, and will continue to defend our position.”
It should be noted, however, that the underlying concerns in the German investigation have to do with Facebook’s monopoly-like qualities, insofar as it offers a service without equivalent substitutes. Similar antitrust arguments have cropped up in the United States: Sally Hubbard, a former assistant attorney general in the New York AG’s Antitrust Bureau, wrote an op-ed in early January accusing Facebook of violating the Sherman Act of 1890, monumental legislation that outlawed monopolies at the end of the American Gilded Age and foreshadowed an era of trust-busting to come. In it, Hubbard argues that big tech companies have convinced U.S. judges to focus only on price manipulation when considering a company’s monopoly-like behavior. “But consumers pay for tech platforms’ services with data, not dollars,” she says. “The Sherman Act makes no mention of prices, and low prices should not be the only goal.” Hubbard points to a couple of multi-billion dollar suits by the European Commission against Google as examples, in which cases Google was found to have forced out competition by forcing out competitors in its search results and in forcing Android users to pre-install Google apps over those of the company’s competitors.
“Facebook, in turn, uses its platform privilege to pick and choose what content we see,” Hubbard writes. “Facebook competes against news publishers and content creators for consumers’ time and data, the fuel for its advertising model. Profit-maximizing algorithms prioritize content that keeps you on the platform, including Facebook’s own Instant Articles and content that makes you fearful and angry (or as Facebook calls it, ‘engaged’).”
The German probe, which will issue its findings to Facebook in the coming weeks, will likely result in an order for the company to stop gathering some user data. “Above all we see the collection of data outside the Facebook social network and its inclusion in the Facebook account as problematic,” said Mundt in a statement from more than a year ago, when the probe presented some initial findings to the public.
Facebook, in response, argued that antitrust laws did not apply to it because, according to its head of data protection Yvonne Cunnane, “although we are popular in Germany, we are not dominant.” Cunnane pointed to the variety of social media platforms and applications available to users as evidence of market competition, failing to mention, however, that some of the most popular are also owned by Facebook.
“Facebook has built up an intricate network for unlimited data collection and compilation that is totally opaque,” said Johannes Caspar, data collection commissioner for Hamburg. “This fundamentally collides with the right to self-determination of those affected.”