Meta loses appeal over how it collects data in Germany
The news
Meta’s data collection practices were called into question on Tuesday after the European Union’s highest court upheld a decision by German antitrust regulators that the company had abused its social media dominance by collecting information about users.
The ruling in the closely watched case by the European Court of Justice paved the way for Germany’s antitrust enforcer, the Bundeskartellamt, to ban Meta from combining data collected about users across its various platforms, including Facebook, Instagram, and WhatsApp, as well as from outside websites and apps, unless it gets explicit permission from users.
The decision undermines Meta’s business model, which relies on selling targeted ads based on the massive amounts of data it collects about its users as they use Meta services and browse the wider internet.
Why it matters: Encouraging stronger oversight of Big Tech
The decision gives new impetus to supporters of tighter regulation of the world’s largest tech companies. While the ruling only applies to Meta services in Germany, it is expected to affect other antitrust authorities in the European Union.
A new EU antitrust law called the Digital Markets Act will take effect in the coming months, giving regulators new powers to encourage competition in the technology sector.
In particular, Tuesday’s court ruling gives authorities across the European Union a firmer legal basis to investigate how data-gathering practices can undermine competition, marking a new direction for antitrust enforcement.
The court said regulators investigating antitrust cases can also investigate whether a company is in breach of European Union data protection law, the General Data Protection Regulation, or GDPR.
Background: A new spin on antitrust law
In 2019, German regulators used a new interpretation of the antitrust law to determine that Meta’s data collection practices not only violated not only the competition rules, but also the GDPR. Authorities said Meta needed users’ consent and couldn’t collect endless amounts of data simply because a user signed up to use one of the company’s services.
Andreas Mundt, Germany’s top antitrust regulator, said Meta’s policy amounted to a wrong choice, forcing people to use Meta services and share their data, or stay away from the company’s ubiquitous social media sites altogether .
After the company appealed against the decision, it eventually ended up before the European Court of Justice in Luxembourg.
Mr Mundt has long urged regulators to crack down on Facebook and other technology giants. He has argued that Facebook uses the data it collects from users to strengthen its position against rivals, thereby harming competition.
What’s next
In a statement, Meta said it was “evaluating the Court’s decision and will have more to say in due course.”
The company will now have to make changes in Germany to comply with the ruling. That will likely include a new menu that gives users more choice about how their data is collected.
But the decision also has implications for other online platforms that collect large amounts of data for digital advertising, including Amazon, Google and TikTok.
“This ruling paves the way for more effective enforcement against dominant digital platforms,” Ursula Pachl, deputy director general of the European Consumer Organization, a consumer rights group, said in a statement.