Meta's practices of data collection were called into question after the European Union’s highest court confirmed a German antitrust regulator's decision that the company abused its dominant position in social media through the harvesting of information about users.
The European Court of Justice's ruling on the closely-watched case cleared the way for Germany’s top antitrust enforcement agency, the Bundeskartellamt to prevent Meta from combining user data across its platforms, such as Facebook, Instagram, and WhatsApp, and from other websites and apps unless users give their explicit consent.
The decision undermines Meta's model of business, which relies heavily on targeted advertising based upon the vast amounts of data that it collects from its users while they browse the internet and use Meta services.
Why it Matters: Encouraging tougher oversight of Big Tech
The decision gives new momentum to those who want tougher regulations on the largest technology companies in the world. The ruling, which only applies to Meta services in Germany is expected to have an impact on other antitrust authorities within the European Union.
In the coming months, a new antitrust law in the E.U. The Digital Markets Act is a new antitrust law that will take effect in the next few months. It gives regulators more powers to encourage competition within the tech sector.
The court's ruling on Tuesday gives the European Union authorities a stronger legal basis for examining how data collection practices can undermine competition. This is a brand new approach to antitrust enforcement.
The court said that regulators who are investigating antitrust cases may also check whether a company has violated the General Data Protection Regulation (G.D.P.R.) of the European Union.
Background: A new twist on antitrust laws
German regulators in 2019 used a novel interpretation to antitrust law, determining that Meta's practices of data collection were a violation not only of competition rules but also of the G.D.P.R. Authorities said Meta had to ask users for permission before collecting data. They could not simply collect unlimited amounts of information because someone signed up to use a company service.
Andreas Mundt said that Meta's policies were a false choice. They forced people to choose between using Meta services, sharing their data or staying away from the company's social media sites.
The company finally appealed against the decision and was brought before the European Court of Justice at Luxembourg.
Mr. Mundt is a long-time advocate for tougher regulation of Facebook and other tech companies. He has claimed that Facebook is using the data collected from its users to gain an advantage over competitors, thereby harming the competition.
Meta released a statement saying it would 'evaluate the Court's ruling and have more to share in due time'
In order to comply with this ruling, the company must now make changes to its operations in Germany. This is likely to include an updated menu giving users greater control over how their data will be collected.
The decision has implications not only for Amazon, Google, and TikTok, but also for other platforms that collect data in large quantities for digital advertising.
In a Tuesday statement, Mr. Mundt said that the use of personal information by large internet companies could also be considered abusive under the competition law. The judgment will have a far-reaching effect on the business models in the data economy.