European Union Court: Unlawful Meta Merges Facebook, Instagram and WhatsApp

In a landmark decision, the European Court of Justice (ECJ) sided with Germany’s competition regulator Bundeskartellamt against Meta Platforms, the parent company of Facebook, Instagram and WhatsApp. the court decided that Meta’s practice of aggregating user data from various services without the user’s explicit consent is illegal. This decision supports the Bundeskartellamt’s 2019 finding that Meta is abusing its dominant market position by collecting and processing user data without their explicit consent.

The Bundeskartellamt argues that Meta’s business model, which relies heavily on detailed user data analytics to deliver personalized ads, exploits its market dominance. Meta has contested this decision, taking the case to the Higher Regional Court in Düsseldorf, which then referred some open questions to the ECJ.

No More GDPR Evasion

For years, Meta avoided asking its users for explicit permission to process their data. After the General Data Protection Regulation (GDPR) went into effect, Meta argued that personalized advertising was a “contractual necessity” for its services. This interpretation was rejected by the European Data Protection Council following a lawsuit by privacy organization NOYB (None Of Your Business). Subsequently, Meta changed its terms of service and began condoning the processing of sensitive data by “legitimate interests”, a move that was legally questionable.

In its ruling, the ECJ clarified that competition authorities can investigate and ban potentially unlawful data protection practices if they identify abusive market behavior. The court also pointed out that Meta violated the GDPR by processing sensitive data without asking, which could reveal information such as religious beliefs or sexual orientation.

Doubt as to Justification of Data Processing

The ECJ expressed doubts about the legality of the overarching consent for the processing of surreptitiously obtained data necessary for contract fulfillment. The court held that the need to fulfill a contract with a person would only justify a disputed practice if the processing of the data was “objectively necessary” and the main subject of the contract could not be fulfilled without it. Courts also do not recognize a “legitimate interest” in the processing of Meta data without the affected person’s consent, even if the company is financing itself through personalized advertising.

Impact on Tech Giants

This decision could have significant implications for other tech giants such as Google, which use similar data collection mechanisms. Andreas Mundt, head of Germany’s antitrust agency, tweeted that the decision would have far-reaching implications for the business models used in the data economy. “When large internet companies use highly personal consumer data, this use could also be considered a violation of competition laws,” Mundt said.

Max Schrems, Chairman of NOYB, saw the decision as “a heavy blow for Meta, but also for other online advertising companies. It is clear that any industry law approach to circumventing the GDPR is null and void.”

That decision means that Meta has to seek proper approval and can’t use its dominant position to force people to agree to things they don’t want. This decision could have a significant impact on Meta’s business model and has the potential to change the landscape of the internet, giving a boost to non-commercial, decentralized and free services.