These were strategic decisions that still shape large parts of the Internet today. Over ten years ago, the social network Facebook first bought the photo service Instagram and later the messenger WhatsApp. This meant that the advertising group, now renamed Meta, was able to bring emerging competition into its own company, benefit from the rapidly growing number of users – and quickly merge their data.
The more extensive and precise, the more Meta can exploit the mountains of data. Targeted, personalized advertising is ultimately the core business of the US provider. That could cost almost $40 billion companies in the last quarter of the year alone implement this, recently the price per advertisement has increased by 10 percent. A thriving business.
It has long been a well-founded suspicion that the company is abusing its dominant market position. The Federal Cartel Office came to this preliminary conclusion in 2017. This is not just about the forced merging of data from the different meta-services, but also about data that flows to the provider in bulk and without a Facebook account, for example via the “Like button” on millions of websites. All of this was impermissible, the regulator decided in early 2019.
Settlement after years of litigation
But it was only today that the Federal Cartel Office was able to complete this procedure. Meta fought tooth and nail against this and went to the European Court of Justice (ECJ) – ultimately in vain. The company has withdrawn its complaint to the Düsseldorf Higher Regional Court, and the decision is therefore final.
The result is now “an overall package of measures that gives users of the social network Facebook significantly improved options when it comes to linking their data,” says one Authority press release. The merger itself is therefore not illegal. However, users must agree to this separately, and consent may not be made a prerequisite for using Facebook.
After an “intensive discussion process” between Meta and the Federal Cartel Office, the company gradually implemented a series of measures or promised to do so in the next few weeks. This includes an account overview with which users can decide for themselves which meta-services, such as Facebook and Instagram, they want to link with each other and thus allow data exchange for advertising purposes. “It remains possible to use the services separately without any significant loss of quality,” says the Federal Cartel Office.
Newly introduced cookie settings are also intended to make it easier to separate Facebook and Instagram data and other data. In addition, the Facebook login has a special status. Anyone who wants to use this to log in to websites or apps from other providers no longer has to allow all data to be merged with data from third-party providers. There is also more information, notifications and guidance for Facebook users to help them find the relevant settings more easily – or at all.
Groundbreaking decision
“The Facebook decision from 2019 can still be considered groundbreaking today,” says Andreas Mundt, President of the Federal Cartel Office, about the frustratingly long process. Based on the decision made at the time, Meta made significant adjustments to the way it handles user data. “The key point here is that using Facebook no longer requires that you consent to the unlimited collection and allocation of data to your own user account, even if the data is not stored in the Facebook service,” says Mundt.
In addition, the decision of the Federal Cartel Office led to an important key decision by the ECJ and inspired legislative initiatives at the national and European level. “This also means that we are in a completely different position today in terms of legal clarity and intervention instruments in this area than we were five years ago,” says Mundt.
How the EU enforces its new rules
In fact, the law against restrictions on competition (GWB amendments) has been revised several times in Germany in recent years. This gives the Federal Cartel Office additional tools to curb the abuse of market power, if necessary even to the unbundling of market-dominant companies. The EU Commission can also regulate so-called “gatekeepers” more closely on the basis of the Digital Markets Act (DMA).
Meta not off the hook yet
Although the proceedings in Germany have now been completed, this does not mean “that all antitrust concerns have been completely eliminated,” emphasizes the Federal Cartel Office. Among other things, it is keeping an eye on the EU Commission’s current investigation into Meta’s so-called “Agree or Pay” model.
The online service either wants users to consent to the processing of their data for advertising purposes – or a monthly fee of 10 euros so that they no longer display personalized advertising. However, from the perspective of the EU Commission, but also consumer and data protection organizations, this does not represent a real choice and could violate EU laws. According to the EU Commission, the investigation should be completed in the spring. It’s quite possible that the fight won’t start until after that.
