Facebook, Meta’s social network, has suffered another setback with the way it uses its data for online advertising. The EU’s highest court ruled on Monday that competition regulators can probe companies to see if they comply with privacy laws.
As part of their investigations into anti-competitive tech practices, the Court of Justice in Luxembourg has said that regulators may examine how companies use data in order to strengthen their positions. This is a significant move because it allows regulators to look at breaches of privacy laws.
In a ruling handed down on Tuesday, the court ruled that Facebook could not “justify” its use of users’ personal data for ad targeting unless they gave their consent. Privacy rules came into effect in 2018 and are intended to protect the rights of citizens when it comes to how companies use their personal data.
In response to the decision, the German Federal Cartel Office stated that the judgment would have “far-reaching consequences” on the business model used in the Data Economy.
The court’s ruling is a major step in enhancing the power of antitrust regulators, who can now go after some of the biggest tech companies like Meta or Google for the way they manage the vast amounts of data that they collect.
Andreas Mundt, the president of the cartel office, said that the decision “sends an important signal to the enforcement of competition law in the digital sector where data is crucial for market power”. He said that large internet companies’ use of “very personal” data by consumers can be considered “abusive”.
The Luxembourg court said on Tuesday that the German cartel office had a right to use their powers to prevent Facebook combining data on its site with WhatsApp without consent from users to target them with ads in 2019.
The court’s decision was made in response to a Facebook appeal against a decision from Germany in 2019. Facebook argued that the German regulator had mixed privacy laws with antitrust regulations, leading a Dusseldorf court to grant the tech giant permission to pool data until the final decision was made.
In June 2020, the highest civil court of Germany ruled that Facebook must comply with an order by the antitrust watchdog. Facebook was required to alter the way it handled user data as a result of this order.
The German authorities sought the opinion of EU courts on whether antitrust regulators can also include data use in their investigations tackling anticompetitive abuses.
The EU court stressed on Tuesday the importance of cooperating with other authorities and proposed a new law which would allow regulators share information about fines sooner in any investigation regarding a privacy violation.
This will reduce the likelihood that disagreements occur and facilitate consensus building. The dispute arose after regulators disagreed on how much Meta should be fined for privacy violations .
Meta said, “We’re evaluating the decision of the court and will have more information in due time.”