Facebook uses terms of use that also provide for the processing and use of user data collected during internet use independent of the Facebook platform. The Bundeskartellamt has prohibited Facebook from processing such data without further consent of the private users. The Cartel Senate of the Federal Court of Justice ruled today that this prohibition may be enforced by the Federal Cartel Office.
Facts:
Facebook Ireland Limited (hereinafter: Facebook), based in Ireland, operates the social network Facebook in Europe, which provides private users with a communication platform on the internet. Other subsidiaries of the Facebook group offer further internet services such as Instagram, WhatsApp, Masquerade and Oculus in particular.
Private users do not pay a fee to use the social network. However, their participation in the network requires that they agree to Facebook's terms of use when registering. These stipulate that Facebook provides each user with a personalised experience. To do this, it uses personal data about the user that is available to Facebook from the use of other group-owned services such as Instagram and from the user's other internet activities outside of facebook.com. The Terms of Use refer to a Data Policy that explains the collection and use of personal data in more detail.
The network is financed through online advertising. On the one hand, advertising can be placed on Facebook pages. With various programming interfaces provided by Facebook ("Facebook Business Tools"), companies can also connect their own websites or applications for mobile devices (apps) with Facebook pages in a variety of ways. For example, Facebook users can express their interest in these pages or certain content via plugins ("Like" or "Share" button) or post comments and log in to third-party websites via a "Facebook login" using their user data registered with Facebook . The success of a company's advertising can be measured and analysed via measurement and analysis functions and programmes offered by Facebook. Not only the behaviour of private users on Facebook pages is recorded, but also the call-up of third-party pages via corresponding interfaces (Facebook Pixel), without the user having to become active for this. The analytical and statistical functions of "Facebook Analytics" provide companies with aggregated data on how Facebook users interact with the services they offer across different devices, platforms and websites.
Course of proceedings to date:
The Bundeskartellamt considers the use of the terms of use to be a violation of the prohibition under Section 19 (1) GWB to abuse a dominant position. Facebook was dominant on the national market for the provision of social networks. It abused this position by making the private use of the network dependent on its authority to link user and user device-related data generated outside of facebook.com with the personal data arising from Facebook use itself, contrary to the provisions of the General Data Protection Regulation (GDPR). By decision of 6 February 2019, the Bundeskartellamt prohibited Facebook and other group companies from using corresponding terms of use and processing personal data accordingly.
The Düsseldorf Higher Regional Court has not yet ruled on the appeal filed against it. However, at Facebook's request, it has ordered the suspensive effect of the appeal pursuant to Section 65 (3) ARC due to serious doubts about the legality of the order. The consequence of such an order is that the Bundeskartellamt's order may not be enforced until a decision has been made on the appeal.
Decision of the Federal Supreme Court:
The Cartel Senate reversed the decision of the Düsseldorf Higher Regional Court and rejected the application for an order of suspensive effect of the appeal.
There are neither serious doubts about Facebook's dominant position on the German market for social networks nor about Facebook abusing this dominant position with the terms of use prohibited by the Cartel Office.
Decisive for this is not the question brought to the fore by the Cartel Office in the contested order as to whether the processing and use of personal data of Facebook users arising from their use of the internet outside of facebook.com and independent of a Facebook login complies with the provisions of the General Data Protection Regulation.
Rather, what is decisive is that terms of use that do not give private Facebook users a choice are abusive,
- whether they want to use the network with a more intensive personalisation of the user experience, which is associated with potentially unrestricted access to characteristics also of their "off-Facebook" internet use by Facebook, or
- whether they only want to agree to personalisation based on the data they disclose themselves on facebook.com.
The abuse ruling - which, according to established case law, requires both the determination of adverse effects on the affected markets and a weighing of all interests involved, which is oriented towards the function of the ARC directed towards the freedom of competition - is thereby essentially based on the following considerations:
Facebook operates as a social network operator in two markets. On the one hand, it offers private users the platform as a medium for presenting the user's person in their social relationships and for communication. On the other hand, it enables companies to advertise on the network and thus also finances the user platform, for the use of which users do not pay any (monetary) fee. As Facebook promises its users personalised experiences and thus communication content beyond the mere platform function, there are, however, fluid transitions and entanglements between services to users and the refinancing of the platform provision through various forms of online advertising.
As a dominant network operator, Facebook bears a special responsibility for maintaining the still existing competition on the social network market. In this context, the high importance of access to data from an economic perspective must also be taken into account.
The lack of choice for Facebook users not only impairs their personal autonomy and the protection of their right to informational self-determination, which is also protected by the GDPR. Against the background of the high barriers to switching that exist for users of the network ("lock-in effects"), it rather also constitutes an exploitation of users relevant under antitrust law, because competition can no longer effectively exercise its control function due to Facebook's dominant position. According to the Bundeskartellamt's findings, significant parts of private Facebook users want a lower level of disclosure of personal data. With functioning competition on the social network market, a corresponding offer would be expected. Users for whom the extent of data disclosure would be an important decision criterion could switch to this.
The terms of use designed in this way are also likely to hinder competition. It is true that Facebook's market position is primarily characterised by direct network effects, since the benefit of the network for private users as well as for advertising companies increases with the total number of people connected to the network. Facebook's market position can also only be successfully attacked if a competitor succeeds in gaining a sufficient number of users to make the network attractive within a reasonable time. However, access to data is not only an essential parameter of competition on the advertising market, but also on the social network market. Facebook's access to a significantly larger database further reinforces the already pronounced "lock-in effects". In addition, this larger data base improves the social network's possibilities to finance itself with revenues from advertising contracts, which also depend on the scope and quality of the available data. Finally, because of the negative effects on competition for advertising contracts, an impairment of the market for online advertising cannot be ruled out. Contrary to the opinion of the Court of Appeal, it is not necessary in this respect to establish that there is an independent market for online advertising for social media and that Facebook also has a dominant position on this market. The impairment does not have to occur on the dominant market, but can also occur on a non-controlled third market.
Order of the Federal Supreme Court of 23 June 2020 - KVR 69/19 -
Lower court:
OLG Düsseldorf - Order of 26 August 2019 - VI-Kart 1/19 (V), WRP 2019, 1333
Source: Press release of the Federal Supreme Court of 23.06.2020
