Facebook's Data Dominance Risks European Antitrust Clampdown

  • German Cartel Office opens probe into social network's terms
  • Regulator reviews whether company abused its market power

Facebook Inc.’s control over the private data of millions of users is being probed by Germany’s antitrust agency, foreshadowing a possible new wave of competition investigations across Europe into how the world’s biggest social network leverages its treasure trove of customer information.

Germany’s Federal Cartel said it’s examining whether Facebook abused its possible market dominance by forcing customers to agree to terms allowing the use of their data. The authority said it’s in close contact with regulators including the European Commission and competition authorities of the other European Union nations over the issue.

"Facebook’s use of unlawful terms and conditions could represent an abusive imposition of unfair conditions on users," the German agency said. For advertising-financed Internet services such as Facebook, information about users is hugely important, said Andreas Mundt, the regulator’s president.

The German probe adds to a growing list of antitrust threats to U.S. Internet giants in the EU -- from Google Inc. to Amazon.com Inc. Up to now, Menlo Park, California-based Facebook has mainly tussled with privacy watchdogs in the bloc in a clash over its revamped policy for handling personal photos and data. Agencies in France, Belgium, the Netherlands, Spain and Hamburg, Germany, have opened separate investigations.

‘Confident’

The social network is “confident that we comply with the law and we look forward to working with the Federal Cartel Office to answer their questions,” according to an e-mailed statement from Facebook.

Mundt said the regulator will look into whether users are adequately informed about how their data is collected and used.

He said Facebook may be labeled as a “dominant” player in the social network market, making the company obliged to obey stricter rules governing its behavior. Facebook is collecting large amounts of personal data from various sources, according to the statement.

"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, " the regulator said. "It is difficult for users to understand and assess the scope of the agreement accepted by them."

‘Abusive Practice’

The regulator doubts this procedure is legal under German data-protection law and would find it an “abusive practice” under antitrust law if there is a connection between such an infringement and a market dominance, the office said.

The European Commission said it will stay in contact with the German agency on the case, which concerns a “novel issue.”

“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,” said commission spokesman Ricardo Cardoso.

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