Facebook and the abuse of market power or the German Federal Cartel Office as data protection authority

The German Federal Cartel Office (Bundeskartellamt) has started preliminary proceedings against Facebook in early March, trying to find out if Facebook was misusing its market power to enforce abusive terms and conditions because of alleged data protection law violations. What sounds just like what antitrust authorities do, may in fact have a huge impact on Facebook and how it is behaving against its users.

What is happening?

European antitrust law prohibits the misuse of a dominant market position (Art. 102 TFEU), e.g. by imposing unfair trading conditions (Art. 102 lit. (a) TFEU). The Federal Cartel Office is now trying to find out two things:

First, if Facebook has a dominant position on the relevant market, the relevant market being the product market, where Facebook is offering its services and where customers are making use of such services.

Second, if Facebooks terms and conditions are “unfair” because of the alleged violations of German data protection law. Unfair in this case means in a way, which would not have been possible if Facebook did not have a dominant position.

While the first point is already not that easy to find out, since the market definition for social network services is complex and unclear, it might turn out even more difficult to find out if Facebook does impose improper terms and conditions, since it will be hard to prove if Facebook users had accepted the terms and conditions if Facebook did not have a dominant market position. It will not be sufficient to prove that the terms and conditions do not comply with German data protection law. Therefore, it is also very unlikely that the Federal Cartel Office will prohibit the current terms and conditions and replace them by new ones, as some privacy groups may have hoped.

What the Federal Cartel Office can do

However, if the Federal Cartel Office (or the European antitrust authorities, since it is very likely that the case will not stay on a Germany only level) will be able to prove the points described above, it may not only prohibit further use of the terms and conditions, but also impose a fine, irrespective of where Facebook has its main place of business (which was the main point why data protection authorities so far did not get through with their concerns).

Fines in cartel cases can be relatively moderate to very high, starting from low five digit numbers and going up to high seven digit numbers, depending on the annual revenue of the company in question. For example, in the latest Google case, which was initiated last year by the European Commission, fines of around 6 Mio EUR are expected.

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