Facebook is facing an investigation in Germany over whether it properly informs users as to how their data is collected and used.
The German Federal Cartel Office, known locally as the Bundeskartellamt, said Wednesday that it has launched a probe of Menlo Park, California-based Facebook and its Irish and German subsidiaries. The investigation will examine whether Facebook's terms and conditions for collecting user data are unlawful and too confusing to understand, and if those factors play a role in the company's dominance as a social network.
A spokeswoman for Facebook said, "we are confident that we comply with the law and we look forward to working with the Federal Cartel Office to answer their questions."
European regulators have come down hard on companies like Facebook and Google over alleged privacy and antitrust violations, often launching probes and threatening the tech players with fines if they don't comply with local regulations. They've been especially keen to go after US companies that hold dominant market positions across Europe.
The Bundeskartellamt is trying to see if it can link any violations regarding the use of member data to the social network's dominance, as that would make it an antitrust case. The collection of user data plays a vital role for Facebook. The company uses such information for targeted advertising, a key source of revenue.
"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 Bundeskartellamt said.
In its announcement, the Bundeskartellamt didn't outright accuse Facebook of abusing its position as the world's largest social network. Rather, it raised the possibility.
"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," the Bundeskartellamt said. "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," the Bundeskartellamt continued. "If there is a connection between such an infringement and market dominance, this could also constitute an abusive practice under competition law."
Facebook currently has more than 1 billion active users and owns other popular services, including the WhatsApp and Facebook Messenger instant messaging apps and the photo sharing app Instagram.
As part of its probe, the Bundeskartellamt said it's in contact with the data protection officers and consumer protection associations as well as the European Commission and the competition authorities of the other European Union members.