The German FCO's decision against Facebook: a first step towards the creation of digital house rules?

Abstract

The 2019 decision by the German Federal Cartel Office (‘FCO’) against Facebook for its alleged abuse of a dominant position through its data collection practices is a landmark case that has received close attention beyond the German borders. It is the first case in which a European competition authority has found that terms of use that breach relevant principles under the data privacy framework can constitute abusive conduct in the form of an exploitative abuse under the competition rules. The case raises questions as to the relationship between the two legal frameworks. The FCO found that Facebook‘s terms of use and data collection practices constituted exploitative business terms directly harming Facebook users and also had detrimental effects on competition by reinforcing Facebook's market power in the social network market and advertising market. The case raises interesting questions on market definition and dominance in digital markets as well as on causality between dominance and abuse. In the bigger picture the Facebook case fits into the continuous efforts by the FCO to apply competition law in the digital sector in a dynamic manner. This article examines the FCO's reasoning in the Facebook Decision and outlines some challenges that companies in the digital sector might face in the aftermath of the decision.