KARLSRUHE/BERLIN, Germany (Reuters) - Facebook (FB.O) must comply with an order by Germany’s antitrust watchdog to curb data collection from users, a top German court ruled on Tuesday, in a setback for the U.S. social network company that could set a wider precedent.
The Federal Court’s stay order, which suspends a decision by a lower court, backs the Federal Cartel Office’s view that Facebook abused its market dominance to gather information about users without their consent.
Lead judge Peter Meier-Beck, explaining the decision, said there was no serious doubt that Facebook had a dominant market position in Germany, nor that it had abused terms and conditions banned by the cartel office.
“Facebook must give users the choice to reveal less about themselves - above all what they reveal outside of Facebook,” Meier-Beck said.
Welcoming the ruling, cartel office President Andreas Mundt said it showed that “if data are collected and exploited illegally, it should be possible to take antitrust action to prevent the abuse of market power.”
Facebook said the ruling did not relate directly to appeal proceedings which continue.
“We will continue to defend our position that there is no antitrust abuse,” Facebook said. “There will be no immediate changes for people or businesses who use our products and services in Germany.”
Legal experts said the ruling could have wider ramifications, because Germany is the first country to explore whether data dominance is an antitrust issue.
“The cartel office is attempting to tame the tech giants and to stop the build-up of economic power through integration of data to ‘super profiles’,” said Rupprecht Podszun at the Institute for Competition Law at Heinrich Heine University in Duesseldorf. “This is something new in terms of antitrust law.”
The cartel office had objected to how Facebook pools data on people from third-party apps - including its own WhatsApp and Instagram - and online tracking of people who do not have accounts via Facebook “like” or “share” buttons.
In its original order in Feb. 2019, the cartel office said Facebook would only be allowed to assign data from WhatsApp or Instagram to its main Facebook app accounts if users consented voluntarily.
Collecting data from third-party websites and assigning it to Facebook would similarly require consent. Without such consent, Facebook would have to substantially restrict its collection and combining of data.
Facebook appealed against the cartel office’s original action, which was suspended by a regional court in Duesseldorf last July. Facebook continues to press its case in Duesseldorf.
(Refiles to add dropped word “said” in fourth paragraph)
Reporting by Douglas Busvine. Editing by Jane Merriman