Meta against cartel office: German office may continue to annoy Zuckerberg

Among many lawyers it is simply called “the Facebook case”. The daring – some say bold – solo effort by a German authority against one of the most powerful corporations. The case should annoy Meta boss Mark Zuckerberg in far away Silicon Valley for years. The Federal Cartel Office argues with the company behind Facebook, WhatsApp and Instagram. The European Court of Justice (ECJ) has now ruled in favor of the German authorities.

The judges approve the office’s unusual step of 2019. At that time, the German anti-trust authorities prohibited Meta, data from its services Instagram, Facebook, Whatsapp and Messenger merge in the background. From the combined information about the person and their preferences, Meta creates profiles that form the basis for the display of digital advertising in the group’s social networks. This advertising brings the group billions in sales. Users could not specifically prevent this merging of data.

In its ordinance, the Cartel Office referred to the data protection – which is actually not his riding. Facebook complained against it: A cartel authority is responsible for market concentration and not for data protection. In view of the large number of competitors, the company is not dominating the market anyway.

However, the digital economy has become so complex that data issues are also competition issues – and therefore power issues. The judges recognize that too. The Cartel Office may venture into the foreign legal area – because it has coordinated with the relevant data protection authorities: the Federal Data Protection Commissioner, Hamburg’s top data protection officer (Facebook has a Germany office in Hamburg) and the Irish supervisory authority (Metas European headquarters is in Dublin). The cartel office has “fulfilled its obligation to cooperate loyally with the relevant national supervisory authorities and the lead supervisory authority”. This is the boundary between privacy and antitrust law torn down by the Supreme Court. The Irish authority responsible for enforcing the EU General Data Protection Regulation is accused of not taking decisive action against violations by US tech companies because Ireland needs them as a location. That could be one reason why antitrust authorities in other countries feel compelled to take action against Facebook. The court also rejected Meta’s argument that it was forced to collect extensive user data because it would not be possible to operate without advertising revenue.

Users are more or less at the mercy of Meta’s ecosystem

Andreas Mundt, President of the Bundeskartellamt, said: “The judgment is an excellent signal for antitrust law enforcement in the digital economy. Data is a decisive factor in establishing market power there.” Meta stated that they would examine the verdict and only comment afterwards.

Against the background of the procedure, however, Meta has already partially implemented the requirements of the ordinance of the office. In June, the group said it would introduce a new account overview. In it, users can set whether their Instagram and Facebook accounts should be linked – as the group would be fine with for profile building. However, you can also choose to keep the data separate – a siled solution as desired by the agency.

Meta’s ecosystem, to which the user is more or less at the mercy while the apps exchange data about him in the background, is now cracking. Rupprecht Podszun, professor of civil law, German and European competition law at Heinrich Heine University in Düsseldorf, has been observing the case for a long time. He says: “It’s not enough for users to just suspect: ‘Something is happening with our data in the background.'” make it explicit and give users the choice to exclude certain things”. The law on digital markets will also subject tech companies to stricter rules this fall to prevent abuse of power.

“Consumers could be entitled to compensation.”

For the time being, however, the judgment has no direct impact on users. The opinion of the Luxembourg judges serves as an aid to the Düsseldorf Higher Regional Court in the actual proceedings between Meta and the Cartel Office. This has been moving back and forth between German courts for years, and now it has made a stop at the ECJ. The ECJ ruling is now going back to the Düsseldorf court, which appealed to the European judges. It is unclear when a decision will be made in Düsseldorf.

If the German judges follow the decision from Luxembourg, this could be a jackpot for users. Attorney Sebastian Louven, who represents the Federal Association of Consumer Organizations in the proceedings as a representative of consumers: “Consumers could be entitled to damages if the German courts rule in line with the ECJ and confirm the decision of the Federal Cartel Office.” Since the procedure has been running since 2016, millions of people in Germany could then be entitled to compensation – but this will only become clear after the end of the German procedure. Your data would then have been merged without authorization for years. That could be a lot more uncomfortable for Mark Zuckerberg than for a few officials from Bonn.