{"id":19380,"date":"2020-06-24T07:09:01","date_gmt":"2020-06-24T07:09:01","guid":{"rendered":"https:\/\/rbsitsoftwaresolution.com\/blog\/antitrust-case-against-facebooks-super-profiling-back-on-track-after-german-federal-court-ruling.html"},"modified":"2020-06-24T07:09:01","modified_gmt":"2020-06-24T07:09:01","slug":"antitrust-case-against-facebooks-super-profiling-back-on-track-after-german-federal-court-ruling","status":"publish","type":"post","link":"https:\/\/www.rbsitsoftwaresolution.in\/blog\/antitrust-case-against-facebooks-super-profiling-back-on-track-after-german-federal-court-ruling.html","title":{"rendered":"Antitrust case against Facebook\u2019s \u2018super profiling\u2019 back on track after German federal court ruling"},"content":{"rendered":"

A landmark regulatory intervention<\/a> that seeks to apply structural antitrust remedies to cut big (ad)tech\u2019s rights-hostile surveillance business models down to size has been revived after Germany\u2019s federal court overturned an earlier ruling that had suspended enforcement of a ban on Facebook combining user data.<\/p>\n

The upshot is the tech giant could be forced to stop combining the personal data of users of its various social services with other personal data it harvests on Internet users via its various social plug-ins and tracking pixels. Which in turn would amount to a structural separation of Facebook\u2019s <\/a> social empire.<\/p>\n

That said, there\u2019s still some mileage left in the legal process \u2014 which will likely delay any enforcement for months more at least. But the federal court has put the train back on the tracks.<\/p>\n

As we\u2019ve reported previously<\/a>, the intervention by Germany\u2019s antitrust regulator is seen as highly innovative as it joins the dots of EU privacy rights and competition law. So this case is being closely watched by regulators around the world.<\/p>\n

\n

Bundesgerichtshof best\u00e4tigt vorl\u00e4ufig den Vorwurf der missbr\u00e4uchlichen Ausnutzung einer marktbeherrschenden Stellung durch Facebook <\/a> https:\/\/t.co\/KzTpJakvgq<\/a><\/p>\n

\u2014 Bundesgerichtshof (@BGH_Bund) June 23, 2020<\/a><\/p>\n<\/blockquote>\n

\n

Quick recap: Last year<\/a> Germany\u2019s Federal Cartel Office ordered Facebook to stop combining data on users across its different services after determining that its zero opt-out TCs combined with Facebook\u2019s dominant market position in the social network space to make its pervasive people-profiling an \u201cexploitative abuse\u201d.<\/p>\n

The order originated with an investigation by the Bundeskartellamt (FCO) into Facebook\u2019s data-gathering practices, which kicked off in March 2016. Almost exactly three years later <\/a>the regulator concluded it had identified abuse \u2014 and issued the order banning Facebook from combining data on users across its own suite of social platforms without first obtaining their consent. <\/span><\/p>\n

Instead of agreeing to offer users a choice over how they\u2019re tracked, Facebook appealed \u2014 and, <\/span>last August<\/a>, the Higher Regional Court in Dusseldorf granted it a suspension, delaying application of the order \u2014 and seemingly derailing the chance for an innovative regulatory intervention against a rights hostile \u2018track and target\u2019 adtech business model.\u00a0<\/span><\/p>\n

All was not lost though, as the FCO appealed the suspension \u2014 leading to today\u2019s fresh legal twist.<\/p>\n

In today\u2019s decision<\/a>, the Germany Federal Court of Justice provisionally confirms the FCO\u2019s allegation of an abuse of a dominate position by Facebook \u2014 opening the door to the regulator being able to enforce the ban.<\/p>\n

So it\u2019s game (back) on for the antitrust case against platform giants whose dominance stems from mass surveillance of Internet users.<\/p>\n

In a statement, FCO president Andreas Mundt welcomed the decision. <\/span><\/p>\n

\u201cI am pleased about the decision by the Federal Court of Justice,\u201d he said. \u201cData are an essential factor for economic strength and a decisive criterion in assessing online market power. The court\u2019s decision provides important information on how we should deal with the issue of data and competition in the future. <\/span>Whenever data are collected and used in an unlawful way, it must be possible to intervene under antitrust law to avoid an abuse of market power.\u201d<\/span><\/p>\n

We\u2019ve also reached out to Facebook for comment.<\/p>\n

The Dusseldorf <\/span>Higher Regional Court has still not issued a ruling on Facebook\u2019s original appeal against the FCO order \u2014 though it granted the company\u2019s request for a suspension, saying it had doubts about its legality.<\/p>\n

But the Federal Court of Justice has overturned that earlier decision.\u00a0And not just overturned it \u2014 it\u2019s blasted it with a legal equivalent of a blowtorch.<\/p>\n

In a press release<\/a> today (in German, which we\u2019ve translated using Google Translate) the court writes [emphasis ours]: \u201cThere are no serious doubts<\/strong> about Facebook\u2019s dominant position in the German market for social networks or that Facebook is abusing this dominant position<\/strong> with the terms of use prohibited by the Cartel Office.\u201d<\/p>\n

The court takes issue with Facebook\u2019s terms and condition \u2014 finding them \u201cabusive\u201d because it says users are not offered a choice over the extent of the company\u2019s tracking and targeting of them; with the court pointing out there\u2019s no option for users to have Facebook\u2019s content \u201cpersonalization\u201d based only on the data they reveal on Facebook.com. Instead Facebook forces users to accept what it calls \u201ca more intensive personalization of the user experience\u201d, which the court further notes is \u201cassociated with a potentially unlimited access to characteristics of their \u2018off-Facebook\u2019 Internet use by Facebook\u201d.<\/p>\n

Which doesn\u2019t sound, y\u2019know, proportionate.<\/p>\n

In additional remarks, the court writes that Facebook\u2019s super profiling of Internet users has negative impacts on people\u2019s personal autonomy \u2014 infringing their rights, not only under EU data protection law, but it asserts this also represents an antitrust abuse as a consequence of how Facebook is exploiting its dominant position in the market for social networks.<\/p>\n

Or, as it put it in the press release: \u201cThe lack of choice for\u00a0Facebook<\/em> users not only affects their personal autonomy and the protection of their right to informational self-determination, which is also protected by the GDPR [General Data Protection Regulation]. Against the background of the high hurdles to change that exist for the users of the network (\u201clock-in effects\u201d), it also represents an exploitation of the users that is relevant under antitrust law, because competition is no longer effective due to Facebook\u2019s dominant position.\u201d<\/p>\n

The court also points to findings by the FCO that significant numbers of Facebook users want to be able to hand over less personal information to use its service \u2014 noting that if thriving competition existed in the social network market there may well be a more privacy-friendly offer from Facebook. Instead, you get none.<\/p>\n

In another interesting observation, the court said Facebook\u2019s access to \u201ca significantly larger database\u201d \u2014 i.e. via its super profiling of users \u2014 reinforces what are already \u201cpronounced\u201d network effects keeping a lid on competition in the social media market. So a double negative.<\/p>\n

Additionally, it suggests Facebook\u2019s super profiling helps the company amass larger ad revenues \u2014 which it notes \u201calso depend on the scope and quality of the data available\u201d. <\/span>\u201cFinally, due to the negative effects on competition for advertising contracts, an impairment of the market for online advertising cannot be ruled out,\u201d it adds in another shot across Zuckerberg\u2019s bow.<\/span><\/p>\n

Commenting on the decision, Rupprecht Podszun, a chair for civil law, German and European competition law at Heinrich Heine University, called it \u201ca spectacular success\u201d for the FCO and an \u201cimportant step forward\u201d in regulating Internet giants whose empires are based on this type of rights-hostile profiling.\u00a0<\/span><\/p>\n

\u201cThe decision is a spectacular success for the competition watchdog, and an important signal for competition on the internet. The proceedings against Facebook are regarded worldwide as a pioneering case: The FCO is attempting to tame the tech giants and to stop the build-up of economic power through integration of data to \u2018super profiles\u2019. This is something new in terms of antitrust law. Exploitation of users through data aggregation, as the FCO has accused Facebook of doing, has so far been uncharted territory,\u201d he told TechCrunch.\u00a0<\/span><\/p>\n

\u201cThe Federal Supreme Court said it has \u2018no serious doubts\u2019 that Facebook is market-dominant and abuses its market power. The court is even stricter than the competition authority: It does not require a protection of privacy laws (as in the General Data Protection Regulation), but it says that freedom of choice and autonomy of users is key in such cases. This is an important step forward \u2013\u2013 making the users\u2019 self-determination a benchmark for competition on the internet.\u201d<\/p>\n

\u201cThe FCO can now demand from Facebook to submit a plan within four months how to stop the merging of data into so-called \u2018super profiles\u2019,\u201d Podszun<\/span> added. \u201cFacebook merges data from the group\u2019s own services such as Facebook, WhatsApp and Instagram with other data collected on the net via so-called Facebook Business Tools. This was the Bundeskartellamt\u2019s central point of attack.\u201d<\/p>\n

The professor remains critical of the pace of regulatory progress \u2014 dubbing it \u201calmost a bad joke\u201d for this latest twist of the legal saga to be couched an \u2018interim proceeding\u2019. <\/span><\/p>\n

He also cautions against expecting any swift break-up of Facebook\u2019s data mining and mingling to follow, noting there are other legal avenues for the lawyered-up company to pursue \u2014 meaning it could be months or even years more before there\u2019s any enforcement of the FCO order.<\/p>\n

\u201cThis is particularly problematic because economic power in digital markets consolidates extremely quickly,\u201d Podszun added, calling for reform of competition law so it can effectively respond to digital gatekeepers<\/span>.<\/p>\n

\u201cThe proceedings therefore show that there must be changes in the way dominance of gatekeeper companies on the Internet is dealt with. The competition authorities must be able to act more effectively and more quickly in such cases. This is where the German and European legislators are called upon to act. Plans are being developed on the national and the European level. The reasoning in the Facebook case will be a boost to competition commissioner Margrethe Vestager in her fight against these companies, too.\u201d<\/p>\n

The sedate pace of regional competition law vs the blistering speed of digital business has long led to calls for competition law reform \u2014 a topic that\u2019s now front of mind for EU lawmakers.<\/p>\n

After Facebook\u2019s first successful appeal of the FCO order, Podszun suggested a number of changes<\/a> were needed to update EU competition law for the platform era. One of which \u2014 to evolve traditional market definitions to allow for interventions in digital markets to prevent tipping \u2014 is <\/span>being actively consulted on by the Commission<\/a> which is now considering whether regulators need a new tool to combat tipping in digital markets.\u00a0<\/span><\/p>\n

It is also looking at applying ex ante regulation to so called \u2018gatekeepers\u2019 \u2014 aka platforms which have gained significant market power \u2014 as another step to try to ensure \u2018fair functioning\u2019 of digital markets.<\/p>\n

Speaking during an Atlantic Council discussion<\/a> today, Commission EVP Margrethe Vestager \u2014 who both leads digital policy for the bloc and heads up its antitrust division \u2014 signalled, in her usual roundabout way, that digitally driven competition reform is indeed coming.<\/p>\n

\u201cWe have an intense debate about competition enforcement in the digital era [and] we need to change for the times we\u2019re in because the market dynamics are different, they are faster, you have marginal prices approaching zero, you have network effects, you have the data-driven economy. So of course we need to change with the times that we\u2019re in,\u201d she said. \u201cBut we will not negotiate and we will not compromise on this being build on the rule of law and the responsibility for the courts in order to make sure that we have equal treatment between businesses.\u201d<\/p>\n

Asked whether she\u2019d like the power to rescind merger approvals \u2014 with the moderator citing the case of Facebook reversing a prior commitment to EU regulators who approved its acquisition of WhatsApp (that it would never combine user data between its eponymous service and the messaging app, before going on to do just that<\/a>) \u2014 she responded that that is \u201ca very specific situation\u201d, before noting that EU regulators performed a competition analysis at the time \u2014 looking at whether, if Facebook did merge data between the services, would it be a \u201ccompetition problem\u201d or not?<\/p>\n

\u201cBack then they found that no that would not be the case. So in that respect\u2026 on substance this would not be a case for unscrambling \u2018the eggs\u2019. And it is indeed very difficult to unscramble the eggs,\u201d she said.<\/p>\n

Vestager also conceded that the third component of EU antitrust decisions \u2014 \u201chow to make competition come back?\u201d \u2014 remains a \u201cwork in progress\u201d.<\/p>\n

\u201cOf course we haven\u2019t seen the effect of the Android preference menu because very few Android phones have been shipped due to the COVID crisis,\u201d she said on that, referring to a major EU antitrust decision against Google<\/a>. \u201cBut it remains to be seen if, when Google is preinstalled after the untying and other services can be chosen, will that work? Will that sort of open the market for others \u2014 search and browsers \u2014 than the Google choices?\u201d<\/p>\n

Article source: http:\/\/feedproxy.google.com\/~r\/techcrunch\/social\/~3\/w7mwnDmtn98\/<\/p>","protected":false},"excerpt":{"rendered":"

A landmark regulatory intervention that seeks to apply structural antitrust remedies to cut big (ad)tech\u2019s rights-hostile surveillance business models down to size has been revived after Germany\u2019s federal court overturned <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3],"tags":[10,7,14,15,6,12,11],"class_list":["post-19380","post","type-post","status-publish","format-standard","hentry","category-latest-update","tag-computer-news","tag-downloads","tag-microsoft-download-news","tag-networking-updates","tag-technology-update","tag-wordpress-plugin-download","tag-wordpress-theme-download"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t