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German Federal Cartel Office classifies Meta (formerly Facebook) as a company with paramount significance for competition across markets

06/05/2022

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Germany

On 4 May 2022, the German Federal Cartel Office (FCO) found that Meta Platforms Inc. (Meta) is an undertaking with paramount significance for competition across markets. Thus, following a similar decision against Google/Alphabet at the end of 2021, the cartel authority has now subjected another large digital group to the special abuse control of Section 19a (1) of the German Act against Restraints of Competition (ARC).
 

The decision

Meta, as an internationally active digital group, receives considerable popularity for its Facebook, Instagram and Whatsapp offerings. The FCO estimates the number of Meta users worldwide at 3.5 billion people. In Germany alone, about 83 percent of all internet users use the messenger service Whatsapp. Due to this number of users, the amount of data acquired by Meta is also considerable. In addition, Meta is the leading provider in the area of social media advertising and is constantly expanding its offering. A current major project is the so-called "Metaverse", a virtual 3D world for which there are numerous accompanying software and hardware offers.

The FCO considers the services offered by Meta to be so comprehensive that the president of the FCO, Andreas Mundt, speaks of a "digital ecosystem". According to Mr. Mundt, Meta is "the key player in social mediaOur investigations have shown that Meta is of paramount significance across markets, also within the meaning of competition law."

Meta stated that it accepted its position as a norm addressee of Section 19a (1) ARC and will not appeal against this.
 
 

Further proceedings against Meta

Due to competition concerns, the FCO already prohibited Meta from aggregating user data from different sources at the beginning of 2019 (see press release of 07 February 2019). The legal dispute with Meta regarding this decision is still pending before the courts today. In addition, the BKartA has already been conducting proceedings against Meta since 2020 due to the linking of the 3D glasses offering of Meta Quest (formerly Oculus) with Facebook (see press release of 10 December 2020).
 
 

The background

Section 19a GWB was included in the ARC in the course of the 10th GWB amendment. The aim of this provision is to enable the BKartA to take faster and more effective action against the large companies in the digital economy. As soon as the BKartA has determined an overriding cross-market significance for competition with regard to a company, it can prohibit the companies in a second step from certain conduct that could endanger competition. The aim is to ensure functioning competition despite the "gatekeeper" function of the large digital companies.
 
 

Comment

As was already to be expected, after Alphabet/Google, the BKartA now finds the next large digital group to be of overriding importance for competition across markets.

In a next step, it is expected that the BKartA will prohibit Meta and Alphabet/Google from certain conduct.
However, Meta and Alphabet/Google are not only subject to stricter monitoring by the BKartA. The European Commission is also investigating both companies, as Competition Commissioner Margarethe Vestager recently emphasised (German version only). Here, too, special attention is being paid to abuse of the companies' gatekeeper function in the respective markets. Internationally, too, the risks associated with a digital economy dominated by a few corporations are thus increasingly attracting the attention of the competent authorities.
The decisions of the BKartA against Apple and Amazon with regard to Section 19a GWB are still pending. However, in view of the reasons for the decisions in the proceedings to date, it is to be expected that these companies will also be found to be of overriding importance on the market.
 
 

Links:

FCO - Press Releases Meta Section 19a ARC
Fieldfisher: The 10th GWB Amendment

 

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