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BGH sets antitrust law limits to Facebook's data collection

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Germany

On June 23, 2020, the German Federal Supreme Court (BGH) decided in interim proceedings that Facebook must implement the order of February 15, 2019, issued by the German Federal Cartel Office (FCO), regarding the storage and processing of user data, for the time being until the decision in the main proceedings. With this decision, the BGH confirms the allegation of abuse of a dominant market position by Facebook. In essence, the BGH states that Facebook has at least a dominant position in the German market for social media and would abuse this dominant position in that market.

The Cartel Senate of the BGH thus opposes the decision of the Düsseldorf Higher Regional Court of August 26, 2019 - VI - Kart 1/19. In this decision, the Higher Regional Court expressed serious doubts about the legality of the FCO's decision. With regard to the Internet industry, the case is considered by the FCO as one of the most important of its kind.

According to the press release of 23 June 2020, the BGH saw the abusive conduct of Facebook, as evidenced by the press release of 23 June 2020, in particular in the fact that private Facebook users were not given the choice of whether they wanted to use the network with a more intensive personalization of the user experience, which is associated with potentially unlimited access to characteristics of their "off-Facebook" Internet use by Facebook, or whether they only wanted to agree to personalization based on the data they disclose on facebook.com itself. These statements indicate that misuse in the form of exploitative abuse has been assumed here.

In addition, Facebook, as the dominant network operator, would bear a special responsibility for maintaining the existing or potential competition in the social networking market. The high barriers to switching for users (lock-in effects) and the resulting lack of choice for Facebook users would also constitute exploitation of users, as competition would no longer be able to exercise its control function due to Facebook's dominant position. Here the BGH also refers to the statements of the FCO. The FCO found that many users generally only want to disclose personal data to a lesser extent. According to the BGH, if competition were to function, this possibility would be available to the users, so that they would be able to take appropriate evasive action.
 
Furthermore, the BGH stated that Facebook had achieved the dominant position in the market in particular through direct network effects. Both for Facebook and for (potential) competitors, access to data for the affected social networking market was crucial. Thus, the current, considerably larger database would strengthen further lock-in effects. In this respect, a negative impact on the market for online advertising is also conceivable. The BGH also stated that the impairment would not have to occur on the dominated market, but could also take place on a non-dominated third market.
 
The Higher Regional Court Düsseldorf must still decide on Facebook's appeal in the main proceedings.
 
Background

In its decision, the FCO had argued that Facebook was a dominant company in the market for social networks for private users. Accordingly, the regulations of the control of abusive behaviour (Section 19 and following of the German Competition Law (GWB)) apply.
The FCO considered Facebook's data processing conditions to be abusive within the meaning of Section 19 GWB, as they violate the ground principles of the Basic Data Protection Regulation (DSGVO), because of Facebook's market power and are to the detriment of private users and competitors.
 
In the following summary proceedings, after Facebook had appealed against the decision, the Higher Regional Court of Düsseldorf expressed serious doubts about the legality of the decision by the antitrust authorities. Amongst other things, the Higher Regional Court stated that no causal connection between the (possibly existing) violations of data protection regulations and a possibly existing dominant market position of Facebook could be assumed.
 
Outlook

The decision of the BGH is a milestone on antitrust law limits for data collection through internet platforms. User data is extremely important for large internet platforms. Facebook had stipulated very extensive data usage in its terms and conditions. The FCO had assessed this as an abuse of a dominant market position. The BGH clarified that it does not matter whether Facebook violates the DSGVO. Rather, users are exploited in the antitrust sense, because they have no choice about what happens to their data. In addition, competition in the market for social networks and competition in the market for online advertising is hindered.
The legislator will provide further clarity here. According to the explanatory memorandum to the draft of the 10th amendment to the German Competition Law, it should be clear that a breach of data protection regulations by a market-dominant company can violate antitrust law. In addition, the draft of the 10th amendment to the German Competition Law will include a right of access to data in the Competition Law.

Links
 
FCO, Bundeskartellamt prohibits Facebook from combining user data from different sources

Decision of the Higher Regional Court of Düsseldorf (German version only)

Decision of the BGH (German version only)

FCO, Summary of the decision of the BGH in English

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