Meta Platforms, Inc.’s (META) Facebook has met with a huge blow as EU’s Court of Justice sides with the 2019 finding by the German antitrust agency that the firm had abused its power in social media by illegally harvesting data for targeted advertising.
According to the agency, Facebook abused its power by breaking the EU’s General Data Protection Regulation terms. The agency said that agreeing to Facebook’s terms of use to create an account, which include a requirement on data collection, did not amount to free consent because the customers had no choice but to agree if they wanted to use the social network.
The agency sought advice from the European Court of Justice (ECJ) after Meta argued that the German agency had overstepped its authority.
The ECJ ruled on Tuesday that regulators are allowed to probe whether companies comply with its data protection rules. Furthermore, a new E.U. antitrust law called the Digital Markets Act, is set to take effect in the coming months and will give regulators new powers to encourage competition in the tech sector.
This cleared the way for Germany’s antitrust enforcer, the Bundeskartellamt, to block Meta from processing people’s data for personalized advertising, including data collected about users across its different platforms, as well as from outside websites and apps unless it gets explicit permission from users.
The decision undermines Meta’s business model, which relies on selling targeted advertising, based on the massive amounts of data it gathers about its users as they use Meta services and browse the internet. This ruling could also jeopardize the position of other tech giants in the EU, which employ similar data collection mechanisms.
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