Facebook was clobbered by a landmark EU ruling that could mean major changes to the way it does business

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  • Facebook has been clobbered with a landmark ruling in Germany that could mean huge changes to the way it collects data for 32 million users in the country.
  • Germany’s antitrust regulator has told Facebook it must stop forcing users to allow it to collect and combine their data from sources outside Facebook.
  • Among such sources are Facebook-owned apps like WhatsApp and Instagram as well as third-party websites that include Facebook features like the “share” button.
  • Facebook says it plans to appeal the decision. The firm said it faced fierce competition in Germany and was compliant with the European Union’s privacy laws.

Germany’s antitrust regulator, the Bundeskartellamt, or Federal Cartel Office, on Thursday issued Facebook with an ultimatum: Stop hoarding people’s data.

Following an unprecedented three-year investigation involving extensive conversations with Facebook, the Bundeskartellamt issued a press statement declaring that it had “imposed on Facebook far-reaching restrictions in the processing of user data.”

It demands that Facebook – which has 32 million monthly users in Germany – change its terms and conditions so that people can explicitly stop it from hoarding data from different sources, including Facebook-owned apps like WhatsApp and Instagram as well as third-party websites with embedded Facebook tools such as “like” or “share” buttons.

The regulator says bundling users’ data together from different sources without explicit consent results in a lack of control. It also said the extent to which the social network amassed data from elsewhere was an abuse of its dominant market position.

“The only choice the user has is either to accept the comprehensive combination of data or to refrain from using the social network,” the Bundeskartellamt’s president, Andreas Mundt, said in a press release. “In such a difficult situation the user’s choice cannot be referred to as voluntary consent.”

Facebook uses its giant wells of user data to target advertising with ruthless efficiency. Some 99% of its revenue of $US55.8 billion last year came from advertising on its platforms.

Mundt told journalists in Bonn, Germany, that the decision was a step in the direction of breaking up dominant tech companies,Bloomberg reports. “People always ask to break up huge internet companies,” he said, adding: “Well what we do here today is really something like internally breaking them up.”

Read more: Facebook’s business model is being dissected in Germany, where regulators are getting tough on tech

In an FAQ about the ruling, the Bundeskartellamt said that if Facebook planned to continue combining users’ data from various sources, the type of data processing it could use would be “substantially restricted.” If it takes this course, Facebook would have four months to draw up proposals to present to the Bundeskartellamt.

If the Bundeskartellamt ruling proves to be effective in Germany, it could snag the attention of other regulators around the world. Germany has been among numerous countries leading the regulatory charge against Silicon Valley giants. Last year, it introduced fines of up to €50 million ($US57 million) for companies, including Facebook and Twitter, for failing to remove hate speech.

This news comes less than a month after it was revealed that Facebook was planning to merge the back ends of Facebook Messenger, Instagram, and WhatsApp, a move that CEO Mark Zuckerberg said wouldn’t happen until 2020 at the earliest.

Facebook to appeal

In a blog post published soon after the ruling, Facebook said it disagreed with the Bundeskartellamt and intended to appeal the decision. It must lodge its formal appeal with the Düsseldorf Higher Regional Court in the next month.

Yvonne Cunnane, Facebook’s head of data protection in Ireland, and the company’s associate general counsel, Nikhil Shanbhag, wrote the blog post.

“The Bundeskartellamt underestimates the fierce competition we face in Germany, misinterprets our compliance with GDPR and undermines the mechanisms European law provides for ensuring consistent data protection standards across the EU,” they said.

The Facebook executives argued that gathering information on users helped improve its services and protected people’s safety and security by shielding them from inappropriate content and election interference.

Cunnane and Shanbhag added that the Bundeskartellamt ruling threatened to “undermine” the regulatory structures put in place by European Union data laws. “GDPR specifically empowers data protection regulators – not competition authorities – to determine whether companies are living up to their responsibilities,” they said.

Concluding, the pair said: “Every day, people interact with companies that connect and use data in similar ways. And all of this should be – and is – a legitimate area of focus for regulators and policymakers around the world. Yet the Bundeskartellamt is trying to implement an unconventional standard for a single company.

“This is the point we’ll continue to make to the Bundeskartellamt and defend these important arguments in court, so that people and businesses in Germany can continue to benefit from all of our services.”

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