German antitrust watchdog Bundeskartellamt, or Federal Cartel Office (FCO), has ruled that Facebook must get explicit user consent before combining user data across its owned platforms, per The Verge.
The FCO has given Facebook one month to appeal, which Facebook plans to do, and has already released a blog post stating why it disagrees. In this case, the ruling would apply within Germany, but could inspire copycat regs around the globe.
The FCO argues that Facebook's market dominance makes it impossible for users to give true voluntary consent. In its ruling, the agency essentially argues that Facebook uses its market dominance to abuse people's privacy as it collects their data.
Because of that dominance, regulators argued that most consumers can't entirely escape the company collecting their data, and further doubted that some consumers — even those who opt out of using Facebook's services — truly understand the company's data practices, and therefore can't truly consent to the exchange.
The watchdog's president, Andreas Mundt, put it this way: "The only choice the user has is either to accept the comprehensive combination of data or refrain from using the social network. In such a difficult situation the user's choice cannot be referred to as voluntary consent."
Facebook's stated plan to integrate the underlying infrastructure of core Facebook, WhatsApp, and Instagram could arguably make its services even more entrenched, and further heighten its practices around data combination. That could inspire more regulators to investigate the company on antitrust grounds, including the FTC.
The watchdog's ruling takes the greatest issue with how Facebook combines data to track users. The order could curtail Facebook's ability to combine user data from separate apps without voluntary consent. Currently, Facebook collects user data via its owned platforms like WhatsApp and Instagram, as well as both user and non-user data from third-party sources scattered across the web. Taken together, this data helps the company to build out highly personal profiles of individuals, which it uses to improve ad targeting.
Assuming that the order is enforced as is, if a user didn't give voluntary consent as defined, Facebook wouldn't be able to combine the user's data to create a profile. Facebook would also be restricted from excluding a user from its services for opting out.
For the social network, that would amount to a dismantling of its business model: What makes Facebook such a powerful ad platform is its ability to collect and combine masses of user data to form hyper-personal profiles.
We view most recent rulings and proposals as early attempts to rein in tech giants, not necessarily definitive statutes with genuine or immediate consequences. It's unclear if this ruling will stick, particularly since Facebook plans to appeal.
But this is not the first such ruling or proposed reg aimed at hamstringing Facebook's business, and it won't be the last, as regulatory scrutiny ramps up against Silicon Valley tech. These early proposals could help flesh out an eventual framework for broad regulation of tech giants like Facebook.