Following a 2021 update to its digital competition rules that are focused on large digital companies that are considered to be of "paramount significance for competition across markets," as the law puts it, Facebook's rebranded parent, Meta, has become the next tech giant to be confirmed as subject to a special competition abuse control regime in Germany.
The five-year designation allows the regulator, the Federal Cartel Office (FCO), to respond more quickly to competition issues related to Meta's operations by setting operating requirements designed to address antitrust violations.
Meta stated that she has not filed an appeal against the designation, according to the FCO. However, the social media behemoth tells us that it disagrees with some of the conclusions, such as that it is the market leader in private social networks, citing what it believes is fierce competition for customers' attention from other social platforms like TikTok, YouTube, Snap, and Twitter.
A spokeswoman for Meta said in a statement on the designation:
“While we disagree with the reasoning leading to the FCO’s decision, our focus remains on delivering the best possible experience to our users in Germany in compliance with all laws and regulations. We look forward to continuing to work constructively with the FCO.”
The FCO certified Google as the first tech behemoth to achieve the ex-ante competition regime's criterion in January. As an FCO investigation into Showcase's small print (which has been underway since June 2021) continues, the tech giant provided concessions on how it handles its news licensing product, Google Showcase, in the nation.
The FCO also has a number of open proceedings involving Meta's companies, including a groundbreaking ruling it made in 2019 that tried to prohibit Facebook from pooling user data across its social networks without authorization. Facebook filed a legal appeal to the ruling, claiming that the competition authority lacks jurisdiction over privacy-related matters. The FCO, on the other hand, claims that Facebook's consentless pooling of user data to create 'superprofiles' for ad targeting amounts to "exploitative abuse," a behavior that dominant firms are prohibited from engaging in under German law.
A German court forwarded a number of legal problems related to the 'superprofiling' case to the European Union's top court in March of last year, but the court has yet to rule. As a result, despite the fact that Meta is now subject to the revised German competition system, progress on that specific antitrust intervention is likely to stall until the CJEU's input, given that the intervention predates the changed legislation.
Since 2020, the FCO has been looking into Meta's practice of attaching usage of its virtual reality platform, Oculus, to having a Facebook account as a possible anti-competitive practice.
The FCO claims that Meta's designation as a company of "paramount significance for competition across markets" means it will be able to complete such procedures faster than it would otherwise — implying that, as the tech giant tries to pull off an already very expensive 'pivot to the metaverse,' Germany's regulator will be on the lookout for any unfair maneuvering (and probably watching Meta's'metaverse' rout).
"Thanks to the digital environment built by Meta with a very big number of users, the firm is the central actor in the field of social media," FCO president Andreas Mundt stated in a statement [which we've translated from German via machine translation]. Meta is likewise a corporation of great cross-market relevance in terms of antitrust legislation, according to our research. After several difficult processes, we have finally legally confirmed its status. Our discovery puts us in a lot better position to respond to any violations of competition law than we could previously with the tools at our disposal. Meta has decided not to challenge our ruling."
For large tech, stricter controls are needed.
Germany is ahead of the curve when it comes to upgrading digital competition regulations to address Big Tech's market clout, which has been a significant cause of concern for regulators throughout the world.
The European Union is amending its pan-EU laws to include an ex-ante regime known as the Digital Markets Act (DMA), and EU legislators reached a political agreement on the legislation in March.
Because there are still certain administrative processes to complete before the bill becomes law, the DMA is not likely to begin applying until later this year.
The UK has also stated in recent years that it will legislate for a "pro-competition" overhaul of competition regulations aimed at platforms with a "strategic market position." However, the Financial Times reported earlier this week that the government has changed its mind on the proposal and would no longer legislate to empower a Digital Markets Unit that was established last year in the current parliament.
When asked about the delay, the Department of Digital, Culture, Media, and Sport told TechCrunch that it "cannot comment on timescales for prospective future legislation." "Our pro-competition regime will change the behavior of the most powerful digital giants and safeguard the businesses and consumers who rely on them across the economy," a spokeswoman said, adding, "We will be responding to our consultation shortly."
In Australia, legislation was approved last year requiring Google and Facebook to enter into discussions with local news publishers to remunerate their material, taking into account how journalism is shared on their platforms.
While an earlier (2019) amendment to EU copyright regulations gave France's antitrust agency the authority to pursue Google for royalties owed to news publishers for the reuse of samples of their work. While Google contested a $592 million antitrust punishment imposed by a French regulator last year, which it called "disproportionate," the internet giant also issued a number of behavioral commitments on news payments in an attempt to resolve the pricey problem.