Yesterday the German Cartel Office announced the launch of an examination of allegations regarding Facebook’s alleged abuse of its market position. According to some accusers, Facebook infringed Germany’s data protection regulations in terms of rules regarding service governing user data.
The investigation targets Facebook Inc. USA, which is the company’s Irish subsidiary, as well as Facebook Germany GmbH in Hamburg. The government office, or Bunderskatellamt, is going to be investigating whether the Facebook terms of service violate data protection provisions.
“Dominant companies are subject to special obligations,” explains Andreas Mundt, president of Bundeskartellamt. “These include the use of adequate terms of service as far as these are relevant to the market.”
Because user data has become so important in our world of advertising-financed Internet services like Facebook, the investigation has seen fit to consider whether users are being adequately informed regarding what kind of data is being collected from them and to what extent.
The German office claims that Facebook’s terms of service may be imposing unfair conditions on users. Because the company collects a large amount of its users’ personal data, the users have been required to agree to terms of service that are often hard to understand, claims the Bundeskartellamt.
Facebook has complied with the law and will comply with the investigation, a Facebook spokesperson stated.
“This is the first time that a company has amassed the sheer volume of data,” stated Susan Schreiner, an analyst at C4 Trends. “In today’s world, where data is the new currency, is this about user data ultimately translating into market power and giving Facebook an advantage over German and other EU Internet companies?
Charles Kind, principal analyst at Pund-IT, dissects the problem into two central issues:
“First is the way Facebook dominates social markets via four of the eight most popular social apps/services,” he states. He’s referring to Facebook, Facebook Messenger, WhatsApp and Instagram. “The second is the company’s business model, which is largely based on selling advertising informed by information about Facebook users.”
Although Facbeook’s market domination isn’t clearly violating any laws, whether or not its practices are as clean as the company claims to be is what’s at issue here.
And this isn’t the first time the company has faced scrutiny. Other European governments have been disturbed by Facebook’s rise to power. Official investigations have been announced regarding the security of the data that Facebook collects and whether or not that could be transferred to the U.S. and be subject to U.S. government surveillance, for example.
The French data protection authority CNIL formally notified Facebook of its requirement to comply with the French Data Protection Act just last month. The French government was most worried about the way that Facebook tracked the browsing data of Internet users who don’t have a Facebook account.
Regardless of government anxiety, national leaders will likely have to find a common ground with the company due to its widespread popularity. There are over 30 million users in France alone, so a compromise will surely have to be made in order to keep everyone happy.