Facebook's Model Attacked by German Antitrust Regulator

Facebook’s advertising model came under attack in a landmark ruling from German antitrust regulators who ordered, according to Bloomberg. They have ordered the social network to overhaul how it tracks its users’ internet browsing and smartphone apps

Germany’s Federal Cartel Office gave the company 12 months to stop “unrestrictedly collecting and using“ data and combining it with users’ Facebook accounts without their consent. Facebook said it was being unfairly singled out by the regulator, which has broken new ground by using antitrust law to tackle data privacy.

"People always ask to break up huge internet companies,“ Andreas Mundt, head of the FCO told journalists in Bonn. “Well, what we do here today is really something like internally breaking them up.“

Europe’s biggest economy has been difficult terrain for social networks after Chancellor Angela Merkel’s government last year started enforcing the continent’s toughest law aimed at reducing hate speech and fake news, threatening to fine the likes of Facebook, Twitter, and YouTube as much as 50 million euros if they failed to delete illegal posts.

Facebook, however, will appeal the decision, saying that the regulator “misapplies German competition law to set different rules that apply to only one company.“

“While we’ve cooperated with the Bundeskartellamt for nearly three years and will continue our discussions, we disagree with their conclusions and intend to appeal so that people in Germany continue to benefit fully from all our services,“ Facebook said in a statement.

Under the order, Facebook can’t tie membership on the platform to people agreeing to unlimited data tracking. Instead, it must provide a technical solution to allow users to opt out of the data tracking outside of the Facebook account. The solution will likely have to go beyond the simple buttons and boxes that have become so familiar to most web surfers.

"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," Mundt said. "In such a coercive situation, the user’s choice cannot be called voluntary consent.“ The decision is the result of a three-year probe into whether Facebook improperly leverages its market power to make users agree to give up their information.

Facebook must signal within four months how it intends to comply with the order. While no initial fine was levied, the company risks a penalty of as much as 10 million euros if it fails to comply. Once it’s implemented, potential penalties for violations are far tougher, as high as 10 percent of global revenue.