Ger­many takes on Face­book in first-ever com­pe­ti­tion probe

The Pak Banker - - COM­PA­NIES/BOSS -

Ger­many's car­tel of­fice is in­ves­ti­gat­ing Face­book for sus­pected abuse of mar­ket power over breaches of data pro­tec­tion laws in the first for­mal probe of the so­cial net­work for vi­o­lat­ing com­pe­ti­tion rules. The watch­dog said it sus­pected that Face­book's terms of ser­vice with its users re­gard­ing how the com­pany makes use of their data may abuse the com­pany's pos­si­bly dom­i­nant po­si­tion in the so­cial net­work­ing mar­ket.

Face­book, the world's big­gest so­cial net­work with 1.6 bil­lion monthly users, earns rev­enues from ad­ver­tis­ing based on data it gath­ers about its users' so­cial con­nec­tions, opin­ions and ac­tiv­i­ties in their post­ings. "For ad­ver­tis­ing­fi­nanced in­ter­net ser­vices such as Face­book, user data are hugely im­por­tant," Fed­eral Car­tel Of­fice Pres­i­dent An­dreas Mundt said. The car­tel of­fice said it had con­sid­er­able doubts about whether Face­book users had been prop­erly in­formed about how their data were used, which it said could vi­o­late strin­gent Ger­man data pro­tec­tion laws.

"There is an ini­tial sus­pi­cion that Face­book's con­di­tions of use are in vi­o­la­tion of data pro­tec­tion pro­vi­sions," the reg­u­la­tor said in a state­ment an­nounc­ing the probe.

Face­book is nearly the twice the size of the world's sec­ond largest so­cial net­work, Ten­cent's QQ of China. Nearly 84% of Face­book's mem­bers are out­side the United States and Canada. The com­pany has faced strong crit­i­cism from politi­cians and reg­u­la­tors in Ger­many, where data pro­tec­tion is strongly reg­u­lated, over its pri­vacy prac­tices.

Co-founder and chief ex­ec­u­tive Mark Zucker­berg vis­ited Ber­lin on a charm of­fen­sive last week.

A Face­book spokes­woman said on Wed­nes­day: "We are con­fi­dent that we com­ply with the law and we look for­ward to work­ing with the Fed­eral Car­tel Of­fice to an­swer their ques­tions." The reg­u­la­tor said it was in­ves­ti­gat­ing whether Face­book abused its mar­ket power by fail­ing to ad­e­quately in­form its users of the scope and na­ture of data col­lec­tion on their In­ter­net surf­ing habits. Face­book owns four of the top eight so­cial net­work ser­vices glob­ally in­clud­ing its core pro­file ser­vice, two sep­a­rate in­stant mes­sag­ing ser­vices, What­sApp and Face­book Mes­sen­ger, and its pic­ture-shar­ing ser­vice In­sta­gram.

"This is cer­tainly an un­usual case," Mark Watts, head of data pro­tec­tion at Lon­don-based law firm Bris­tows, said of how the in­ves­ti­ga­tion marks the first time that data pro­tec­tion is­sues have be­come a sig­nif­i­cant fac­tor in a com­pe­ti­tion case. The Ger­man car­tel of­fice is tak­ing the lead in the case while ad­vis­ing the Euro­pean Com­mis­sion and com­pe­ti­tion reg­u­la­tors in other Euro­pean Union states.

The car­tel of­fice said it was work­ing closely on its probe with the Euro­pean Com­mis­sion, com­pe­ti­tion au­thor­i­ties in other Euro­pean Union states, data pro­tec­tion au­thor­i­ties in Ger­many and con­sumer rights groups.

Euro­pean Com­mis­sion spokesman Ri­cardo Car­doso said the EU ex­ec­u­tive shared the view of the Ger­man car­tel of­fice that the mere in­fringe­ment of data pro­tec­tion rules by a dom­i­nant com­pany did not au­to­mat­i­cally amount to a com­pe­ti­tion vi­o­la­tion.

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