Good morning. David Meyer here, filling in for Alan from Berlin.
European regulators are finding new ways to make life hard for U.S. tech giants.
The latest blow comes courtesy of Germany’s Federal Cartel Office, which has ruled against Facebook on the basis that the company dominates the social networking market, and it’s using that power for “exploitative abuse” of people’s privacy.
The issue is Facebook’s personal data collection from outside its core service—not only from Facebook properties such as WhatsApp and Instagram, but also third-party sites that feature its “like” and “share” buttons. The antitrust regulator doesn’t believe Facebook’s users understand how this data is collated and used; it particularly doesn’t like that users are forced to agree to all this if they want to use Facebook itself. Under German law, those are “exploitative business terms.”
“In view of Facebook’s superior market power, an obligatory tick on the box to agree to the company’s terms of use is not an adequate basis for such intensive data processing,” said Andreas Mundt, the watchdog’s president. “The only choice the user has is either to accept the comprehensive combination of data or to refrain from using the social network. In such a difficult situation the user’s choice cannot be referred to as voluntary consent.”
“Voluntary consent means that the use of Facebook’s services must not be subject to the users’ consent to their data being collected and combined in this way. If users do not consent, Facebook may not exclude them from its services and must refrain from collecting and merging data from different sources.”
This is fundamental stuff for companies like Facebook and Google, which rely on using data from as many sources as possible in order to profile people for advertising purposes.
So it’s no surprise that Facebook is appealing the decision. In a statement released shortly after the ruling, the company claimed it doesn’t have market dominance in social networking, because it competes “directly with YouTube, Snapchat, Twitter and others.”
Except those other social networks are either only tangentially in competition with Facebook, or no real competition at all.
As I wrote last week, Facebook is too massive for the market to push back against its well-catalogued misdeeds—it’s too difficult for most users to escape the social network’s gravitational pull. That leaves regulators with the responsibility of reining it in, on both the privacy and antitrust fronts…at once, in this case.
As companies like Facebook present new regulatory challenges due to their scale and the novelty of the data-centric economy, it’s only natural that regulators respond by getting creative too.
More news below.
| David Meyer | |
| @superglaze | |
| david@dmeyer.eu |
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This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
