Privacy, personal data and antitrust: Germany's Facebook case

Video | October 2019 | 08:38

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Privacy, personal data and antitrust: Germany's Facebook case
Tim Schaper Hello Richard, great to have you here with us again. We have an exciting topic to discuss today. It revolves around the German Federal Cartel Office's brave attempt – as you may put it – to test the limits of its jurisdiction. Let's speak about the German Facebook case. Could you start by outlining the facts of this case? 
Richard Whish QC Well, yes, it's a very interesting case. It's a decision of the Bundeskartellamt of 7 February this year applying German competition law, not applying Article 102 of the Treaty. Essentially the BKA decided that Facebook was guilty of applying abusive terms and conditions to consumers in Germany when they use Facebook – specifically because, if a German citizen signs up to Facebook, he or she agrees that data that is gathered from Facebook use can be accumulated together with data obtained from the use of WhatsApp, Instagram and third party websites to which I may have travelled in my searches, that Facebook can use all of this data that it has acquired about myself and commercialise it without any really meaningful consent to this on my part. So this is held to be an abuse of a dominant position under German law.
Tim Schaper On 26 August, Richard, the Higher Regional Court in Dusseldorf suspended the FCO's prohibition decision.
Richard Whish QC Well, the first thing I would say about that is that this was not the… of course Facebook is appealing to the Upper Regional Court in Dusseldorf. This was not the judgment of the final appeal. This was simply the Court saying that we will suspend the operation of the directions that have been imposed by the BKA pending the outcome of the appeal. So, from my point of view, therefore, I think one shouldn't read too much into this decision because it is simply an interim decision.
Tim Schaper The Court questioned whether competition authorities are equipped to deal with privacy and data issues and stated that the FCO did not explain sufficiently how Facebook's alleged privacy violations of the EU's General Data Protection Regulation affected competition.
Richard Whish QC Well, the first thing I would say there is that, of course, there is the GDPR and the machinery has been established for there to be a data privacy commissioner to decide whether there are infringements of the Regulation etc. And, basically, that is a system that has its own workings and the data privacy commissioner is the person primarily responsible for making sure it's complied with. That having been said, I don't have any difficulty with the idea that, in a particular case, conduct that might infringe the GDPR might also, at the same time, infringe competition law. It's perfectly possible that such a situation might happen. You think back to a case years ago, AstraZeneca, where it was found to have been misleading patent offices as a way of extending the duration of its patent. Now to mislead a patent office is obviously an infringement of whatever the relevant patent law is, but the European Commission said that what AstraZeneca was doing was also an abuse of a dominant position. And I find nothing inherently illogical or wrong or improper about the idea that the same conduct might infringe two or more laws at the same time. The really important thing is which authority is best positioned to cure the problem in question? In this situation, as I understand it, the Bundeskartellamt did liaise with the data privacy officials in Germany and also in Ireland – which is where Facebook was domiciled for these purposes – and none of those authorities had any objection to the BKA using its competition law powers.
Tim Schaper
We very often hear from clients that they prefer dealing with authorities instead of having regulation in place because regulation can go, obviously, far beyond what is maybe necessary. So what do you think between dealing on a case-by-case basis with either a competition or data protection authority or having more regulation?
Richard Whish QC
Well, I certainly don't believe in more regulation for the sake of more regulation. I do think that when you're looking at something like the platforms at the moment – GAFA (Google, Apple, Facebook, Amazon)  – people say there's a problem with platforms. Well, that's not a terribly helpful thing to say. What we have to do is to work out what problems are there with  platforms? Are these problems that are associated with their market power or are they a different type of problems? Are they fake news problems? Are they incitement of violence problems? There's a whole array of different problems. What you have to do in the end is to decide what is the problem and what is the appropriate tool to deal with the problem? As I've said, as a default position, I would say that privacy issues are for the data privacy commissioner. But there are circumstances, it seems to me, where terms and conditions might be also exploitative in terms of competition law – and that's what the BKA has decided here.
Tim Schaper
The Court said consumers were not harmed by not having to consent to Facebook's collection of their data as a condition of using Facebook because they could decide not to use Facebook. I mean, this is certainly not the usual counterfactual.
Richard Whish QC
With respect to those judges, that does not make sense to me as a competition lawyer because the BKA's decision is premised on the idea that Facebook is dominant. Now, one can argue as to whether it is dominant or not, but if it is dominant, the very thing that means is that consumers don't have choice – that's what dominance means. The idea that any consumer has the choice of not dealing with the dominant supplier, well I suppose if you apply that logic to the nth degree, then there would be no such thing as an abuse of dominance because anyone can stop acquiring from a dominant supplier.
Tim Schaper
So one final point to touch upon. It has been intensively discussed and criticised in the competition law community that the FCO had not asked whether consumers get a benefit and to what extent consumers get benefits from the fact that Facebook accumulates this data, which may lead to a more efficient targeted advertising that caters to the needs of consumers. Is there a lack of looking at the multi-sided market?
Richard Whish QC
Well, I think that competition authorities have become perfectly accustomed to the idea of two-sided and multi-sided markets. And, of course, nobody doubts that the platforms, for example, confer huge benefits on citizens. There's no question about that whatsoever and citizens do, indeed, use these services free, and we all are dependent on them quite frankly. But that can't be the end of the story in and of itself. And we have to unpack the word “free” to some extent. I wonder how many citizens do fully understand what is happening to the data that can be collected from their use of Facebook – especially in the circumstances that were applicable in this case – Whatsapp, Instagram, and all other third party sites that one might have travelled over in the course of use of the app.
Tim Schaper
It will be interesting to see how the main proceedings develop and we are sure that the Federal Supreme Court will have a view on this as well.  Thank you, Richard.