German authorities are investigating Facebook for suspected abuse of its dominant market position, marking the first official investigation of this kind faced by the social network.
The German Federal Cartel Office suspects that the privacy terms of the social network violate data protection laws. The office is examining whether Facebook’s market dominance constitutes an abuse of market power through its privacy terms.
– Dominant companies are subject to special obligations, stated the president of the Cartel Office, Andreas Mundt.
– For online services funded by advertising, such as Facebook, user data is extremely important. Therefore, it is crucial from the perspective of market power abuse to investigate whether consumers are adequately informed about the type and scope of the data collected.
– The investigation will focus on Facebook’s U.S. operations, as well as the operations of its German and Irish subsidiaries, the office announced, adding that Facebook is dominant in the social media market and relies on advertising revenues generated from a “large amount of personal data from users.”
And users must consent to this data collection as a condition for using the network.
– Users find it difficult to understand and assess the extent of the accepted agreement, the statement from the Federal Cartel Office noted.
– There is significant doubt about the legality of this practice, particularly under the applicable national data protection law. If there is a connection between such a violation and market dominance, it may also represent an abuse under competition law.
Facebook has stated that it is confident it complies with the laws.
