Facebook Facing Antitrust Investigation In Germany Over User Data

Germany's competition authority is the latest European regulator to open an investigation into how U.S. companies handle users' data, with Facebook — the focus of the latest probe — accused of abusing its dominant position in the market with terms and conditions that are too difficult to understand, in what could be a violation of data protection laws.

"There is an initial suspicion that Facebook's conditions of use are in violation of data protection provisions," Germany's national competition regulator, the Bundeskartellamt, said in a statement. While the investigation is nominally about abuse of market position, it will be seen as a way of German officials enforcing privacy law by linking it to Facebook's position in the market.

The move comes a week after Facebook's CEO Mark Zuckerberg visited Germany on a charm offensive in a country where he has faced criticism for months from politicians and regulators over the company's privacy practices and a slow response to anti-immigrant postings by neo-Nazi sympathizers.

The Bundeskartellamt says it will examine, among other issues, to what extent a connection exists between the possibly dominant position of the company and the use of such clauses. "For advertising-financed internet services such as Facebook, user data are hugely important," Andreas Mundt, president of the Bundeskartellamt, said. "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."

The crux of Germany's argument seems to be that the terms and conditions that Facebook users have to agree to upon signing up to the social network are too complex for ordinary individuals to understand. "In order to access the social network, users must first agree to the company's collection and use of their data by accepting the terms of service. It is difficult for users to understand and assess the scope of the agreement accepted by them."

The regulator goes on to warn: "If there is a connection between such an infringement and market dominance, this could also constitute an abusive practice under competition law."

Facebook has said it believes it fully complies with German law and is willing to work with the officials during their investigation. "We are convinced that we obey the law and be actively cooperate with the Bundeskartellamt, to answer the questions," a Facebook spokesperson said.

Facebook has recently been at the center of the renegotiation of a 15-year-old data transfer agreement known as Safe Harbor, which allowed data to be easily transferred between Europe and the U.S. After Austrian student Max Schrems accused Facebook of not protecting his data sufficiently when it sent it to the U.S., the Court of European Justice ruled Safe Harbor invalid, leading to the development of Privacy Shield, details of which were revealed this week.

Zuckerberg's meeting last week with Angela Merkel's chief of staff Peter Altmeier has clearly not had the impact he would have hoped for, despite Altmeier tweeting a message saying he had "a really good conversation with a man who changed the world."