Privacy Concerns Germany Probes Facebook on Data Mining

Germany’s cartel office has launched an investigation into whether Facebook is violating data privacy rules and abusing its market dominance in Europe's largest economy. At issue is the company's data mining practices.
Mark Zuckerberg's Facebook has again drawn the attention of privacy regulators in Germany.

Less than a week after Facebook co-founder Mark Zuckerberg visited Berlin to address German privacy concerns, the country's antitrust regulator on Wednesday said it was launching an antitrust investigation into the social network's use of data mining.

Germany's Federal Cartel Office said it suspected Facebook of forcing users in Germany to permit the collection of “a large amount of personal user data.” The issue has divided European and U.S. businesses, highlighting the wide gulf that exists between how online privacy is legally treated on both continents.

Essentially, businesses like Facebook are allowed to demand in the United States that users accept its data mining practices as a condition of using its services. In Europe and in Germany, privacy laws are supposed to give users the option of opting out of having their data mined, while still using the services. Facebook's all-or-nothing approach has met with ire in Germany.

At issue are the terms of use that Facebook users are forced to sign in Germany to use the network, the world's largest social-media platform.

We could, for instance, demand that Facebook change some of its user terms in Germany or scrap them. Kay Weidner, Cartel Office spokesman

“It is difficult for users to understand and assess the scope of the agreement accepted by them,” Germany’s antitrust office said in a statement. “There is considerable doubt as to the admissibility of this procedure, in particular under applicable national data protection laws.”

Facebook said it was confident it hasn't violated any rules. A spokeswoman told Reuters 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."

Germany has some of the strictest rules on privacy and data protection in the world, partly as a result of its history of surveillance through the East German Stasi and Nazi dictatorships, which collected vast troves of information to sort and murder millions of Jews or persecute opponents during the Cold War.

The current investigation could force Facebook to make changes in its terms of use, but a fine is not possible, Cartel Office spokesman Kay Weidner told Handelsblatt Global Edition. That is because it was a so-called "administrative procedure," he said.

"When the investigation is fully conducted until the point where abuse of its market position is proven then we could, for instance, demand that Facebook change some of its user terms in Germany or scrap them," Mr. Weidner said.

Only if Facebook failed to comply with the cartel office's orders could the company face fines, Mr. Weidner said, adding that the company was entitled to appeal the regulator's injunctions in court.

Facebook was hardly the first company targeted for its terms: "It often happens that due to conversations with the company, which will certainly take place with Facebook, changes are implemented by the firm. Amazon Marketplace has for instance changed its terms and conditions of use in Europe after we had started a probe," Mr. Weidner said.

The cartel office's investigation of Facebook also "will certainly not be the last of its kind," said Tomaso Duso, an economist at the German Institute for Economic Research and professor at the Düsseldorf Institute for Competition Economics.

"If the control of data gives a company competitive advantages, ousts rivals from the market or bars their entry, then an antitrust probe is appropriate,” Mr. Duso said in a statement.


Facebook-01 Zuckerberg


In Germany, Facebook has become a target of privacy campaigners, although the service is widely used by German consumers.

In January, Germany's highest court deemed illegal a Facebook feature that enables users to invite their friends onto the social network. The feature used the contact lists of Facebook users to promote itself.

On Monday, a Berlin court fined the California-based social network €100,000, or $109,000, for ignoring an order to inform users about how Facebook uses personal photos, videos and other material.

In the antitrust investigation, the German competition watchdog suggested Facebook may be taking advantage of its virtual monopoly.

“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,” the antitrust office said.

The regulator said it would conduct a 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 E.U. member states.”


Kevin O'Brien is editor in chief of Handelsblatt Global Edition. Gilbert Kreijger is an editor with Handelsblatt Global Edition in Berlin, covering companies and markets. To contact the authors: [email protected][email protected]