The Bundeskartellament, Germany's cartel office, has initiated proceedings against Facebook over breaking data protection rules and failing to inform users what data it collects about them and how the company uses their data, particularly in relation to advertising sales.
The cartel office announced that the proceedings were against Facebook Inc., USA, the Irish branch of the company and Facebook Germany GmbH.
Andreas Mundt, the president of Cartel Office, said that for advertising-financed internet services, user data are very important. Thus, it is essential to examine under the aspect of abuse of market power whether the consumers are sufficiently informed about the type and extent of data collected.
He stated that Facebook was dominant in the social media market and relied on advertising revenues generated on the basis of a "large amount of personal user data." As a consequence, Facebook should ask the consent of the users to agree to the collection of data as a condition in using the network.
Moreover, he further added that if there is a connection between such an infringement and market dominance, this could also constitute an abusive practice under competition law.
Tina Kulow, the company's director of corporate communication for Northern, Central, Eastern Europe and Benelux declared in a statement, "We are confident that we comply with the law, and we look forward to working with the Federal Cartel Office to answer their questions."
The German authorities were working in "close contact" with the European Commission, the competition authorities of the other EU member states, data protection authorities and consumer rights groups.
European Commission spokesman, Ricardo Cardoso, said that the EU executive shared the view of the German cartel office, that the mere infringement of data protection rules by a dominant company did not automatically amount to a competition violation.
"However, it cannot be excluded that a behavior that violates data protection rules could also be relevant when investigating a possible violation of EU competition rules," he added.
As noted by Wall Street Journal, what Federal Cartel fears was that Facebook could use its "possible market-dominant position" to force users to consent to the collection of "vast amounts of personal data from various sources," which Facebook could then use to compile data sets that give them an unfair edge in the market, shutting out newer, fledgling firms.
Facebook makes money from targeted advertising to its 1.6 billion active users, using the data that it gathers from profiles, friends, postings, activities and opinions.
Germany has a strict data protection norms and it seems like Facebook has put these norms on the side-lines. This negligence by the social media has raised many concerns among the legal authorities of the country.
