German Regulators Order Facebook to Limit its Data Tracking Systems
Is this the first of many rulings set to come for The Social Network?
This week, the German Federal Cartel Office has found Facebook to be abusing its market power by combining data from Facebook, Instagram, WhatsApp and third party websites. As a result, the FCO has ruled that Facebook will now have to seek explicit consent from German users to collect and combine such information.
The FCO has ordered Facebook to come up with proposals for how it can do this, and if it fails to comply, the regulator will have the capacity to impose fines of up to 10% of the company's annual turnover, a significant hit.
In response, Facebook has published a blog post outlining its various grievances with the ruling.
"While we’ve cooperated with the [German FCO] for nearly three years, and will continue our discussions, we disagree with their conclusions and intend to appeal so that people in Germany continue to benefit fully from all our services"
Facebook specifically notes that the FCO's rulings on data sharing are, in its opinion, incorrect, and potentially restrictive for the platform's German users.
"We tailor each person’s Facebook experience so it’s unique to you, and we use a variety of information to do this – including the information you include on your profile, news stories you like or share and what other services share with us about your use of their websites and apps. Using information across our services also helps us protect people’s safety and security, including, for example, identifying abusive behavior and disabling accounts tied to terrorism, child exploitation and election interference across both Facebook and Instagram."
This comes in the wake of several significant reports outlining the vast depths of data Facebook gathers on its users, including the way in which it's able to track app usage beyond its own tools (via its SDK) and align behaviors across its family of apps for improved targeting.
This also comes amid reports that Facebook's looking to merge the messaging functionalities of Instagram, Messenger and WhatsApp, which would further lend itself to this exact type of data sharing. One of the key reasons that Facebook is reportedly considering such a merger is to avoid regulation - if all of its platforms are integrated in its back-end, there's no untangling them, Facebook couldn't be ordered, as it has been here, to separate such data points and seek individual permission for usage.
The ruling basically places a lot more onus on Facebook to implement specific, expensive measures to better track and utilize user data, while it also potentially limits the platform's capacity for ad targeting by keeping its databases separate. That would not only cost a lot more for The Social Network to implement, but it could be impossible to do, splitting out its various data points specifically - while implementing such in one region would also have implications for others.
And that's before, potentially, other rulings come out along the same line, which could cause major impacts for the company.
This is the exact shift that Facebook has feared. With the Cambridge Analytica controversy, and ongoing reports of political interference by foreign groups, Facebook has been doing all it can to show that it is responsible, that it is able to manage and make effective, secure use of the vast data insights that its 2.3 billion users give it access to. But the evidence is mounting against it - and with that, more and more groups are examining what can be done, what regulations could potentially be put into place, and how the social giant could be pulled into line to protect its users.
If the German ruling holds, that's a significant ruling against Zuck and Co., and could mark the beginning of a much larger movement. There's a lot more to come yet, Facebook will appeal, the decision will be re-examined over and over again in detail. But it could lead to a change in approach from The Social Network.
Watch this space.
Follow Andrew Hutchinson on Twitter