Facebook Faces Setback as EU Court Supports German Antitrust Decision on Data Usage
European Court of Justice grants competition watchdogs the authority to evaluate tech giants' compliance with strict privacy rules, potentially leading to stricter scrutiny of digital platforms.
Facebook suffered a legal defeat on Tuesday at the European Union's highest court, as it lost a groundbreaking antitrust case in Germany that restricted its use of data for advertising. The European Court of Justice ruled that competition regulators can examine whether companies like Facebook adhere to Europe's stringent privacy regulations, typically enforced by national data privacy authorities. The Luxembourg-based court emphasised that antitrust authorities can take into account any violations of data privacy rules while investigating whether tech giants are exploiting their dominant market position to exclude competitors.
In response to the ruling, Meta, the parent company of Facebook, Instagram and WhatsApp, stated, "We are evaluating the court's decision and will provide further information in due course." The court upheld a 2019 German antitrust ruling that posed a threat to Meta's business model, which involves selling targeted advertisements based on user data obtained from their engagement across its services. Meta had appealed the ruling, prompting German authorities to seek guidance from the Court of Justice, the top tribunal of the 27-nation European Union.
This decision has the potential to increase scrutiny on technology companies. Europe has played a pioneering role in curbing the power of major digital platforms, with comprehensive new regulations coming into effect next month and additional rules in progress concerning artificial intelligence.
The German Federal Cartel Office, known as Bundeskartellamt, did not challenge Facebook's use of customer data to target ads on its platform. However, it argued that Facebook should obtain separate consent from users of other apps and websites it owns before combining data to enhance ad targeting accuracy. The central issue revolves around the method Facebook employs to acquire user consent for data processing.
A press release summarising the court's ruling stated that the company cannot rely on a "legitimate interest" to justify the use of personal data for serving ads to users. According to European Union privacy regulations, users must provide explicit consent for their data to be used. Andreas Mundt, the president of the German Federal Cartel Office, remarked that the EU court's decision would have far-reaching effects on the business models of the data economy.
Facebook lost a legal challenge in the European Court of Justice regarding a German antitrust decision.
The ruling grants competition watchdogs the authority to assess compliance with strict privacy rules.
Antitrust authorities can now investigate whether tech giants exploit their dominance by excluding competitors.