German Competition Authority rules against Facebook: Is it the end of Facebook’s business model?

On February 7, 2019, the Bundeskartellamt (German competition authority) decided to impose restrictions on Facebook regarding its processing of user data.

The German competition authority criticized Facebook for collecting user data on non-Facebook platforms, like Instagram, WhatsApp and other sites using the “Like” button, and combining all the collected data without expressly asking users for their consent. Facebook argued that users consented when they created a Facebook account. Similar to most websites, users can either accept all the terms and conditions imposed by Facebook or choose to not use Facebook. They have no other option.

According to the German competition authority, this practice may have helped Facebook reach a dominant market position.

With this ruling, the German competition authority imposed the following restriction: Facebook can continue to collect data on its own platforms but will have to ask for the explicit and informed consent of the users to collect, use and combine data from non-Facebook websites and apps. The restriction will not only protect German Facebook users (about 32 million), but could also influence the competition authorities and data protection authorities of all other European countries, which already monitor Facebook’s actions very closely.

Facebook has one year to become compliant with this ruling. The company is facing monthly penalties of up to 10 million euros (about $11.3 million) if it does not cooperate. But the company already announced that it will appeal the decision.

This is the second time within a few days that a national authority of the European Union is ruling against a major tech company. On January 21, 2019, the French data protection authority fined Google 50 million euros (about $56.6 million) for data collection infringements. Is this the beginning of a change in the data processing industry?