Antitrust authorities eye up Facebook
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Antitrust authorities eye up Facebook

In June, news broke that anti-trust officials in Europe were fining Google a record breaking $2.7 billion for “unfairly favouring some of its own services over those of rivals”, according to the New York Times. Now, Facebook is in the regulators’ spotlight, as Germany’s Federal Cartel Office examines the company’s operations.

Facebook’s share price has risen by 32% so far this year

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SOURCE: Yahoo Finance

Bloomberg reports that the German antitrust authority is investigating whether Facebook “essentially takes advantage of its popularity to bully users into agreeing to terms and conditions they might not understand.” In other words, they’re looking at Facebook’s small print to check that the amount of information the company collects – and the way it collects it – to monetize its huge online advertising business, is ethical.

Frederik Wiemer, a lawyer at Heuking Kuehn Lueer Wojtek in Hamburg, told Bloomberg that the Cartel Office believes Facebook is “extorting” information from its users. He said: “whoever doesn’t agree to the data use gets locked out of the social network community. The fear of social isolation is exploited to gain access to the complete surfing activities of users.”

The extent to which Facebook can be dealt with under antitrust laws is questionable though. Alec Burnside, an attorney at Dechert in Brussels has put forward the opinion that the EU’s case against Facebook is “more radical” than its case against Google, saying: “it asserts that privacy concerns can be antitrust concerns.”

The ruling on Facebook’s case could set precedents for the sector, as the practices in question – gathering data to sell on in one form or another – are a mainstay of monetization options in the digital landscape.

Daniel Wiedmann, an antitrust attorney at P+P Poellath Partners in Frankfurt, thinks Facebook might be on safer grounds than Google was. He told Bloomberg that: “it may be difficult to show that Facebook is really misusing its market position. It’s likely users accept the terms and conditions not because Facebook is the dominant power on that market but because they’re reflecting their preferences.”

The company has declined to comment on the possible outcome of the case.

Disclosure
Dominion holds Facebook in its Global Trends Ecommerce Fund.


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