Germany has begun a crackdown on internet companies by telling Facebook it may no longer collect data about users across the internet without their consent. The move is a direct hit to Facebook’s business model. Sam Schechner and Sara Germano report for The Wall Street Journal:
Germany ordered Facebook FB -0.70% to stop combining data it collects about users’ activities across the internet without their consent, a novel application of competition law that strikes at a cornerstone of the social-media giant’s business model.
In a decision issued Thursday, Germany’s Federal Cartel Office, the country’s top antitrust enforcer, said that Facebook has abused its dominance as a social network by requiring people to allow it to collect information about their wider internet usage as a condition of usage.
The decision comes as Facebook and other tech giants face increasing regulatory scrutiny, particularly in Europe, for business practices that rely heavily on using customers’ personal information. As the constraints pile up on what it can do with the data it collects, Facebook has warned its profitability could suffer.
The authority ordered Facebook to stop assigning data it collects about its users’ activities on third-party apps and websites and even from Facebook-owned services like WhatsApp and Instagram to a user’s Facebook account without their consent.
Users must still be able to access Facebook if they don’t give consent for it to use their non-Facebook data, the authority said, something that is not currently possible.
“Facebook combines all these data, and the user doesn’t usually really know,” said Andreas Mundt, president of the cartel office. “This constitutes an abuse of market power by Facebook.”
Mr. Mundt told The Wall Street Journal that Thursday’s decision could lead to more crackdowns against internet companies.
Read more here.
Jeremy Jones, CFA
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