German competition authorities initiate proceeding against Facebook

Facebook became the latest American technology company to face antitrust hurdles in Europe after the German Federal Cartel Office (Bundeskartellamt), a competition authority, opened an investigation into whether Facebook Inc., USA, Facebook Ireland Limited and Facebook Germany GmbH abused their alleged dominant position in social networking by violating data protection laws. Accordingly, unlike other proceedings the Cartel Office’s investigation targeting Facebook is for the first time based on the potential invalidity of its terms of use pursuant to German data privacy laws.

Violation of data privacy laws

In order to access Facebook’s social network, users must first agree to the company’s collection and use of their data by accepting the terms of service. There is considerable doubt as to the validity of this procedure, in particular under applicable national data protection law as it requires informed consent. Such informed consent is effective only when based on the data subject’s free decision, in addition data subjects have to be informed of the purpose of collection, processing or use and, in so far as the circumstances of the individual case dictate or upon request, of the consequences of withholding consent. Whether Facebook complies with these requirements is disputed by several German data protection authorities. Moreover, in addition to proceedings by the German data protection authorities, if there is a connection between an infringement of data protection laws and market dominance, this could also constitute an abusive practice under competition law.

Abuse of terms as a violation of competition law

Subject to the result of further market investigations, the Federal Cartel Office has voiced that there are indications that Facebook has a dominant market position in the separate market for social networks. Pursuant to German anti-trust laws unlawful terms and conditions of a company with a dominant position in a market could represent an abusive imposition of unfair conditions on users and whether a connection exists between the possibly dominant position of the company and the use of such clauses.

According to Andreas Mundt, President of the Federal Cartel Office “dominant companies are subject to special obligations,” including “the use of adequate terms of service as far as these are relevant to the market.” For this reason it is in the Federal Cartel Office’s opinion, essential to “also examine under the aspect of abuse of market power whether the consumers are sufficiently informed about the type and extent of data collected.”

Our take

The proceedings brought against Facebook based on anti-trust laws are the latest example of authorities addressing the competitive effects of companies’ activities in collecting and using data and to push the boundaries between antitrust law and data protection law.

So far, the German Data Protection Authorities had little success enforcing privacy laws against social media companies like Facebook. First, for most data protection issues, the relevant courts in Ireland have jurisdiction in the European Union, as Facebook does have its business seat there. And even if a Court held Facebook to be non-compliant with domestic data privacy law, enforcing the law has also proven to challenging: Recently the Regional Court in Berlin fined Facebook EUR 100,000 due to the company not adhering to an earlier judgment of the Regional Court in Berlin where the court found that the social media company did not sufficiently inform its users how the company would use content posted on the social network. Unlike anti-trust law, where fines can be imposed of up to ten percent of the total revenue of a company, current data protection laws in Germany only allow for fines up to EUR 300,000.

The new European General Data Protection Regulation, however, grants data protection authorities the ability to impose fines up to four percent of a company’s revenue of the last business year, giving the authorities more severe sanction possibilities in addition to the aforementioned proceedings by the national competition authorities.

Internet’s ‘Hide and Seek’ Battle Continues in Canada

The anonymity of the Internet has posed many challenges to the protection of intellectual property rights. The sheer size of the population of online users and the millions of file-sharing programs and other social media outlets that exist have left IP rights holders struggling to protect their property and goodwill in the digital era. For example, the battle between protecting copyright online while simultaneously protecting the privacy rights of online users has led to interesting debates in the courts as well as new IP strategies that are currently being explored.

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Is my SnapChat really deleted?

Yes and no. SnapChat automatically deletes most messages after they have been opened or expired.  However, it warns users that the recipient may take a screenshot or use some other screen capture technology (or simply take a photo of their screen with another camera).  Our long-time readers may recall that SnapChat entered into settlement agreements with both the U.S. Federal Trade Commission and the Maryland Attorney General on the topic of whether messages disappear.

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Socially responsible advertising

On April 6, 2016, the UK’s Advertising Standards Authority considered a complaint made against Guccio Gucci SpA regarding a video, which originally appeared on the website at www.thetimes.co.uk.  The advert featured several models dancing in a house, clothed in the apparel of the global fashion brand, and the complaint centred around the physical appearance of these models. Continue reading

Liability for friends’ defamatory statements

Liability for third-party defamatory comments on one’s personal account, whether on Facebook or another internet-based platform, is an emerging legal issue in Canadian law.

If a social media “friend” posts defamatory statements about another person on your profile, or other site, can you be personally liable to the defamed person? Do you have any obligation to actively monitor your social media existence in the face of such statements?  Are you liable for third party statements that you may not even be aware of?  Continue reading

Rise of the social media bots

As we discussed in a recent post, “Social media overload”, social media has grown exponentially over the past decade and has caused businesses to change how they operate and how they make decisions. Social media has quickly become one of the most important marketing platforms, providing a convenient way for companies to reach broad audiences. Continue reading

Adding to Glossary of Social Media Terms

We have several new readers to our blog, and we want make sure everyone is aware of our features that not only include blog posts, but also several glossaries. One of our glossaries to help our readers understand what the Marketing and Promotions employees have already discovered is our Glossary of Terms.  Here are some new terms that you may not be familiar with:

  • Vine.  Vine, a social media application owned by Twitter, allows users to record and share looping videos that are six seconds or less. A video can be a full six-seconds, or can be separate, short videos, that are compiled together into a six-second video. A user’s videos that are published on Vine can also be shared on Twitter, Facebook, or Tumblr or embedded onto a website. Users can also share other Vine users’ content with their Vine followers by “revining” a video, which posts Vine videos taken by users directly onto the user’s feed. Vine is used by individual users, but has also been used by numerous companies and brands to promote its products or services. See our posts that include Vine.
  • Revine – the act of sharing a Vine video with all of the user’s Vine followers. Similar to Retweet on Twitter and Share on Facebook.
  • Thunderclap. Thunderclap is a crowdspeaking platform, on which a user creates a campaign (a “Thunderclap”) and invites followers to support his campaign. The campaign message is limited to 117 character, however, the user can tell a more detailed story on their Thunderclap page. A campaign can be a link to a charity or online petition, an auction, a health PSA, a political campaign, a campaign to raise awareness regarding a certain issue, a book launch, or any other campaign. If a Thunderclap user chooses to support the campaign, the supporter allows Thunderclap access to their social media account and permission to share a message on the user’s Facebook, Twitter, or Tumblr account. If the number of campaign supporters rises to a pre-determined threshold prior to the end of the campaign, then Thunderclap will “blast out” the social media messages from the supporter’s social media accounts at the same time. If the campaign creator does not recruit enough supporters by the campaign’s end date and time, no posts will be made. According to Thunderclap, the platform is not just for non-profits and social causes and can also be used by brands to connect with its audience, promote an event or product launch, or more. See our posts on Thunderclap.

You may also be interested in our other glossaries: Worldwide Glossary of Law, Glossary of Guidance, and Glossary of Social Media Sites.

Social Media and Potential Jurors

Social media profiles and postings by potential jurors can provide litigation counsel with substantial information about these individuals, including their likes, dislikes, and views on various issues and potential biases. A March 25, 2016 federal trial court ruling, however, led both parties to agree to forego these searches. Continue reading

Asking employee to delete Twitter posts can be unlawful

On March 14, 2016, the popular chain, Chipotle Mexican Grill, was found to have violated the National Labor Relations Act (NLRA) when it asked an employee to delete posts on his Twitter account about the company.

Specifically, in Chipotle Services LLC d/b/a Chipotle Mexican Grill and Pennsylvania Workers Organizing Committee, a National Labor Relations Board (NLRB) administrative law judge determined that  that the employee’s “tweets” constituted protected activity. Continue reading

Facebook “like” button violates privacy laws

By Nerushka Deosaran and Tatum Govender

On 9 March 2016 the Düsseldorf Regional Court in Germany ruled that an online shopping site, Peek & Cloppenburg, which integrated Facebook’s “like” button into its website had violated users’ privacy rights.

How the “like” button works

The button allows website users who click on it to share instantly the pages and content from the website on their Facebook profiles. This technology is a rapidly-growing marketing tool. Continue reading

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