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Facebook emails could lead to tougher EU regulatory scrutiny

Dec 06 2018 21:53
Aoife White

Facebook emails showing the company threatened to cut off data to potential rivals added a new target for the regulatory armory that is being amassed by European regulators.

The publication of the emails by UK lawmakers preceded a vote by EU legislators on Thursday that backed draft rules requiring online platforms to treat businesses - including rivals - fairly.

In the new year Germany will conclude an antitrust probe that may call on Facebook to change privacy terms. EU privacy regulators are also armed with the power to fine for data breaches, following the roll-out of GDPR in May.

"Facebook is now on notice that we cannot continue to undermine the trust citizens place, not only in our online platforms, but our democracy itself," said Claude Moraes, a British member of the European Parliament who quizzed Facebook chief executive officer Mark Zuckerberg at a June hearing. "A big stick is available to the EU in the form of competition and taxation powers."

A trove of internal correspondence, published online Wednesday, provided a look into the ways Facebook executives, including Zuckerberg, treated information posted by users like a commodity that could be harnessed in service of business goals.

Apps were invited to use Facebook’s network to grow, as long as that increased usage of Facebook. Certain competitors, in a list reviewed by Zuckerberg himself, were not allowed to use Facebook’s tools and data without his personal sign-off.

The message may increase scrutiny around whether Facebook is a monopoly - one of the social network’s biggest current political risks. Damien Geradin, a Brussels-based lawyer at Euclid Law, said the refusal of access to Vine data could be seen as a potential refusal to deal with rivals. He said Facebook would need to be shown as essential to users, and it‘s "not clear it is."

Tim Wu, a professor at Columbia Law School, said the emails "suggest exclusionary conduct" against Vine and "clearly add to the case that the acquisition of WhatsApp was illegal," according to a Twitter post.

New legislation

New legislation might require Internet giants to treat rival services "equally without discrimination" with some exceptions, according to rules voted by EU lawmakers on Thursday. Their version still needs to be backed by the full European Parliament, likely next week, and then the final text of the law must be negotiated with EU governments.

Germany already sees Facebook as the country’s dominant social network, which puts the company on warning. The German Federal Cartel Office probe focuses on the way the social network scoops up information on how users surf the web. Any changes required by regulators may affect its ability to sell useful ads on the network.

The power internet giants wield with access to user data and the ability to crush rivals by cutting off links to it, is increasingly a focus for European regulators. Both the EU and Germany are looking at how Amazon.com Inc. treats sellers on its platform, with the EU zeroing in on the advantage it gets on rivals’ bestselling items to check if it then starts selling its own-brand copycats.

Microsoft and Apple got scrutiny over how they might choke off rivals’ access in EU probes of their takeover plans. Facebook escaped a long probe from the EU over the deal but was later fined €110m for failing to disclose how it could link data between services.

Privacy officials are also showing impatience with Facebook, with British Information Commissioner Elizabeth Denham telling the UK Parliament that the company needs to significantly change its business model and practices. Her office has led the European investigations into how data of millions of Facebook users, mostly in the US and UK, could have ended up in the hands of Cambridge Analytica, a consulting firm that worked on Donald Trump’s US presidential campaign.

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