Facebook Inc T&C Are Abusive, Says German Regulator, Begins Probe

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Facebook Inc’s (NASDAQ:FB)  collection of data from subscribers is being called-out as “abusive” by German regulatory body, Federal Cartel, amounting to “anti-trust” business practice, according to news reports on Wednesday.  The agency will probe the terms and conditions of the social networking site, since users are required to consent to the use of their personal data by the network, in order to use Facebook services. The technology giant is accused of using its domination in the industry to compel users to “consent” apart from other terms and conditions.

Facebook is the largest of the service providers in social networking industry, twice the size of its closest competitor, Chinese social networking site Weibo.

“Scope” of T&C Not Understood

Federal Cartel states that Facebook Inc will have to be watchful of its “dominant” player position and comply with strict rules governing the region.

The President of the Cartel, Andreas Mundt, has stated that “It is difficult for users to understand and assess the scope of the agreement accepted by them.” Mundt doubts that the procedure is legal, as per German laws governing data protection. Additionally, the procedure could prove to be an “abusive practice” when considered in terms of anti-trust business practices, the regulatory body has explained. If a connection between the infringement of German data-protection laws leveraged by is market dominance, then Facebook Inc will have to face the consequences.

“Novel issue”

Thus far, US-based technology companies have been accused of “tax-inversion” strategies as it the case of Google Inc as well as anti-trust issues, data-protection issues on different concerns. However, it is for the first time that the European Commission is reviewing a case where data-protection infringement is caused by market dominance. Most of the affected nations of the European nation have deployed their local anti-trust bodies to probe and fine the offending technology companies. However, in the case of Germany’s Federal Cartel accusations, a more powerful probe by a panel with wider investigatory powers would be set-up.

The European Commission believes, “it cannot be exclude” that data protection violation could also include active violation of EU Competition Rules,” said Ricardo Cardoso, a spokesman for the commission.

Ben Myers

Ben began his long career in international finance and investing after graduating with a degree in Finance & Accounting. Prior to founding a financial advisory firm he worked with multi-national institutions including HSBC and Bank of Ireland. After several stints as a chief analyst at forex/binary options companies Ben still remains a keen trader and featured contributor on numerous financial sites.