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German competition authority opens investigation into social network's terms of data use

Facebook's data use policy is under investigation by Germany's main competition authority.

The Federal Cartel Office (FCO) said it is looking into whether "with its specific terms of service on the use of user data, Facebook has abused its possibly dominant position in the market for social networks".

It said there is a question over whether Facebook's terms of data use comply with data protection laws and that "Facebook’s use of unlawful terms and conditions could represent an abusive imposition of unfair conditions on users" under German competition rules.

Facebook said that is "confident" it complies with the law and is looking forward to working with the Federal Cartel Office to answer their questions".

EU competition laws prohibit businesses with significant market power unfairly exploiting their dominant market positions. Holding a dominant market position is not in and of itself prohibited.

In a statement Andreas Mundt, president of the FCO, said: "Dominant companies are subject to special obligations. These include the use of adequate terms of service as far as these are relevant to the market. For advertising-financed internet services such as Facebook, user data are hugely important. For this reason it is 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."

The FCO said that "has indications" that Facebook holds a dominant position in the market for social networks.

"Facebook collects a large amount of personal user data from various sources," the FCO said. "By creating user profiles the company enables its advertising customers to better target their advertising activities. In order to access the social network, users must first agree to the company's collection and use of their data by accepting the terms of service. It is difficult for users to understand and assess the scope of the agreement accepted by them. There is considerable doubt as to the admissibility of this procedure, in particular under applicable national data protection law. If there is a connection between such an infringement and market dominance, this could also constitute an abusive practice under competition law."

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