Meta loses EU court fight against German regulator's antitrust order on user data
Ruling paves the way for Germany to prevent Meta consolidating from users across its various platforms
Meta fails to reverse decision while Microsoft faces EU antitrust probe of its own over product bundling
Meta's attempt to challenge a German antitrust order focused on its ability to monetise a substantial amount of user data has been unsuccessful in the European Union court.
The EU's Court of Justice on Tuesday delivered its ruling [pdf], affirming that Germany's Federal Cartel Office acted within its jurisdiction in 2019 when it directed Facebook to revise its approaches to monitoring users' internet browsing and smartphone app.
The case centred on a challenge raised by Meta following the determination by the cartel office that Meta's data collection practices not only violated competition rules but also contravened the General Data Protection Regulation (GDPR).
A key issue in the case was Meta's ability to link users' data across various platforms, such as Facebook, Instagram and WhatsApp.
Meta employs a business model commonly observed in Big Tech companies, where it collects user data for the purpose of behavioural advertising.
In 2019, the German regulator issued a directive to the social media giant, demanding that it discontinue the practice of collecting users' data without their explicit consent.
The regulator highlighted that Facebook was prohibited from amassing substantial amounts of data solely on the basis of a user's registration for any of the company's services.
Following Facebook's appeal, the case eventually reached the European Court of Justice in Luxembourg.
On Tuesday, the court ruled that Meta is obligated to seek permission before collecting significant quantities of personal data, invalidating the various alternatives that Meta had proposed.
The ruling paves the way for Germany's antitrust regulator to prevent Meta from consolidating data gathered from users across its various platforms, as well as data obtained from external websites and applications, unless explicit consent is obtained from the users.
Significantly, this ruling provides EU authorities with a stronger legal basis to scrutinise data-collection practices that could potentially undermine competition in the region.
Meta responded to the ruling by stating that it is currently assessing the Court's decision and will provide further comments at a later time.
Following the ruling, Meta will need to implement changes in Germany to align with the decision, which will likely result in users having more options regarding the collection of their data.
The German cartel office expressed satisfaction with the ruling.
"The judgment will have far-reaching effects on the business models used in the data economy," tweeted Andreas Mundt, the head of Germany's Cartel Office.
"Data is a decisive factor in establishing market power. The use of the very personal data of consumers by the large internet companies can also be abusive under antitrust law."
Privacy activist Max Schrems, who has previously lodged complaints against Meta, acknowledged that the judgment will have a favourable effect on his ongoing legal proceedings against the company.
Moreover, the decision carries implications for other online platforms, which collect substantial volumes of data for digital advertising purposes.
EU's antitrust probe against Microsoft
On Tuesday, Reuters reported that European Union antitrust regulators are moving closer to initiating a detailed investigation into Microsoft's practice of bundling products with Office 365.
The vendor's attempts to dissuade an official probe have proven unsuccessful thus far.
Microsoft became the subject of EU scrutiny following a complaint lodged by Slack, the workspace messaging app owned by Salesforce, in 2020.
At the time, Slack alleged that Microsoft had engaged in unfair integration by incorporating its workplace chat and video application, Teams, into its Office product.
In 2017, Microsoft introduced Teams as a complimentary addition to Office 365, gradually replacing Skype for Business.
To avoid a formal investigation, Microsoft initiated discussions with the European Commission last year. As part of its efforts, the company recently proposed reducing the price of its Office product without its Teams app.
"We continue to engage cooperatively with the Commission in its investigation and are open to pragmatic solutions that address its concerns and serve customers well," a Microsoft spokesperson told Reuters.
If Microsoft is ultimately found to be in violation of EU antitrust regulations, it could face a fine of up to 10% of its global turnover.
However, there is still an opportunity for Microsoft to refine its proposed remedy before the watchdog initiates a formal investigation.