Germany: Bundeskartellamt initiates proceeding against Facebook on suspicion of having abused its market power by infringing data protection rules

The Bundeskartellamt has initiated a proceeding against Facebook Inc., USA, the Irish subsidiary of the company and Facebook Germany GmbH, Hamburg. The authority is investigating suspicions that with its specific terms of service on the use of user data, Facebook has abused its possibly dominant position in the market for social networks.

There is an initial suspicion that Facebook's conditions of use are in violation of data protection provisions. Not every law infringement on the part of a dominant company is also relevant under competition law. However, in the case in question Facebook’s use of unlawful terms and conditions could represent an abusive imposition of unfair conditions on users. The Bundeskartellamt will examine, among other issues, to what extent a connection exists between the possibly dominant position of the company and the use of such clauses.

Andreas Mundt, President of the Bundeskartellamt: "Dominant companies are subject to special obligations. These include the use of adequate terms of service as far as these are relevant to the market. For advertising-financed internet services such as Facebook, user data are hugely important. For this reason it is essential to also examine under the aspect of abuse of market power whether the consumers are sufficiently informed about the type and extent of data collected."

Subject to the result of further market investigations, the Bundeskartellamt has indications that Facebook has a dominant market position in the separate market for social networks. Facebook collects a large amount of personal user data from various sources. By creating user profiles the company enables its advertising customers to better target their advertising activities. In order 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. It is difficult for users to understand and assess the scope of the agreement accepted by them. There is considerable doubt as to the admissibility of this procedure, in particular under applicable national data protection law. If there is a connection between such an infringement and market dominance, this could also constitute an abusive practice under competition law.

The Bundeskartellamt is conducting the proceeding in close contact with the competent data protection officers, consumer protection associations as well as the European Commission and the competition authorities of the other EU Member States.