Trou­ble in court for the so­cial net­work

Financial Times USA - - COMPANIES -

against big US tech­nol­ogy com­pa­nies, said in a speech yes­ter­day, that the com­pany’s ef­forts en­sured a less-than-max­i­mumfine.

“Thanks to [Face­book’s] co-oper­a­tion, the fine is lower than it would have been oth­er­wise,” she said.

Face­book says it flagged changes in its What­sApp data shar­ing pol­icy with the com­mis­sion last Au­gust, and ad­mit­ted to hav­ing mis­led author­i­ties dur­ing the ac­qui­si­tion.

The com­pany says it “acted in good faith” and the er­rors “were not in­ten­tional”, adding that the an­nounce­ment “brings this mat­ter to a close”.

But while Face­book may have got off rel­a­tively lightly, the case does not mean an end to its reg­u­la­tory chal­lenges in Europe.

In the past week, France’s data pro­tec­tion agency slapped the com­pany with a €150,000 bill for in­ap­pro­pri­ately col­lect­ing and us­ing con­sumer data. On the same day, author­i­ties in Bel­gium and the Nether­lands re­leased a joint state­ment that crit­i­cised the busi­ness for how it tracked users and tar­geted them with ad­ver­tis­ing.

All of this came just days after Italian author­i­ties fined What­sApp €3m for shar­ing data with Face­book with­out ad­e­quately warn­ing users.

The com­pany also faces the prospect

Euro­pean Court of Jus­tice rules the 15-year-old “safe har­bour” agree­ment that allowed com­pa­nies to trans­fer data to the US is in­valid

Ger­man court fines Face­book €100,000 for fail­ing to elu­ci­date how con­tent would be used

Ger­man com­pe­ti­tion author­ity opens probe into whether Face­book abused its mar­ket­ing power by in­fring­ing data pro­tec­tion rules

Face­book wins an ap­peal in Bel­gium against a court rul­ing that said it in­ap­pro­pri­ately col­lected dig­i­tal in­for­ma­tion on users and non-users

Hamburg author­i­ties or­der Face­book to stop stor­ing data of Ger­man What­sApp users

French data pro­tec­tion agency fines Face­book €150,000 over how it col­lects and uses con­sumer data

Italy fines What­sApp €3m for shar­ing data with its par­ent group of a new levy in the UK, pro­posed in the Con­ser­va­tive party man­i­festo yes­ter­day, to sup­port work to stop on­line abuse.

Face­book is the lat­est Silicon Valley com­pany to find it­self in the crosshairs of Euro­pean reg­u­la­tors, join­ing Google, Ama­zon and Ap­ple. Author­i­ties in­sist that the in­quiries are dis­crete but one area in which the com­pa­nies face a co­or­di­nated ef­fort is how they col­lect and use data.

This is the bat­tle Brus­sels is pon­der­ing and it has two lines of at­tack: data pro­tec­tion and com­pe­ti­tion pol­icy.

“The fu­ture of big data are not just about tech­nol­ogy,” Ms Vestager said in a speech last au­tumn. “It’s about things like data pro­tec­tion, con­sumer rights and com­pe­ti­tion. Things that give peo­ple con­fi­dence that big data won’t harm them.

“If we want big data to ful­fil its prom­ise, then we need to en­force the rules ef­fec­tively.”

Phil Lee, a data pro­tec­tion spe­cial­ist at Field­fisher, the law firm, says the ten­sion be­tween Euro­pean pri­vacy norms and the busi­ness mod­els of Face­book and Google means that reg­u­la­tors and big US tech­nol­ogy groups are head­ing for a “show­down”.

“Europe has a sense that Silicon Valley com­pa­nies are not fully en­gag­ing with data pro­tec­tion in the way they would like,” he says.

The EU has the strictest pri­vacy rules of any ma­jor mar­ket and data pro­tec­tion agen­cies take an ex­pan­sive view of their author­ity. Although the so­cial net­work has its main head­quar­ters in Ire­land, it has of­fices that sell ad­ver­tis­ing in countries across the bloc. France, Ger­many, the Nether­lands and Bel­gium say this gives them free rein to over­see and even fine the US group. Face­book dis­putes this view, say­ing that only Ire­land should over­see its data poli­cies.

The sec­ond line of at­tack from Brus­sels is less con­crete than the data pri­vacy con­cerns, as com­pe­ti­tion author­i­ties are com­ing to grips with how to reg­u­late com­pe­ti­tion in mar­kets with­out prices, where peo­ple ex­change their data for free ser­vices. “The com­pe­ti­tion rules weren’t writ­ten with big data in mind. But the issues that con­cern us haven’t changed,” Mrs Vestager says.

Com­pe­ti­tion author­i­ties are strug­gling to Mar­grethe Vestager: Face­book’s co-oper­a­tion curbed level of fine de­cide how to reg­u­late com­pe­ti­tion in mar­kets where peo­ple give up their data in ex­change for free ser­vices. “Most of the time these com­pa­nies are now pow­er­ful not be­cause of as­sets, but be­cause of the data they have,” says Jan Philipp Al­brecht, a Green MEP who over­saw the in­tro­duc­tion of the EU’s new data pro­tec­tion rules known as GDPR. “If you use legally ob­tained data for mar­ket abuse, or for dis­crim­i­na­tion of con­sumers, then this should be taken into ac­count by com­pe­ti­tion law. This is long over­due.” Delv­ing into Face­book’s data prac­tices would not be un­ex­pected for Euro­pean an­titrust author­i­ties. Bun­deskartel­lamt, Ger­many’s an­titrust agency, is al­ready con­duct­ing a closely watched in­ves­ti­ga­tion into whether the so­cial net­work abused its mar­ket power by in­fring­ing data pro­tec­tion rules. And Face­book has to worry about more than just reg­u­la­tors: Euro­pean con­sumers are also awak­en­ing to their pri­vacy rights and will soon have the right to de­mand dam­ages. In 2012, Max Schrems, a 24-year-old Aus­trian law stu­dent, launched a se­ries of cases against Face­book for in­vad­ing his pri­vacy through its ag­gres­sive data col­lec­tion prac­tices. His case led to the Euro­pean Court of Jus­tice strik­ing down the Safe Har­bour agree­ment, used by sev­eral large US com­pa­nies to trans­fer data be­tween Europe and the US.

Mr Schrems has also filed a clas­s­ac­tion suit on be­half of 25,000 Face­book users for the com­pany’s pri­vacy vi­o­la­tions, for which he is claim­ing up to €12.5m.

“Un­der GDPR, you will have the right to claim emo­tional dam­ages for any vi­o­la­tion of pri­vacy law,” says Mr Schrems. “So if Face­book merges your data with What­sApp, you can go after them for dam­ages. Imag­ine if bil­lions of users ask for $500 each. It will be a whole dif­fer­ent ball game.”

In­ter­net com­pa­nies have so far re­mained largely un­reg­u­lated be­cause their ser­vices have not been main­stream enough to catch the attention of politi­cians, he adds. “Now, it is a real­ity in all sec­tors of the economy so it has to be reg­u­lated like ev­ery­thing else. Europe started off with soft touch reg­u­la­tion but none of that worked, so they are mov­ing into law­mak­ing,” he says. Ad­di­tional re­port­ing by Paul McClean and Hannah Kuch­ler in San Fran­cisco

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