Obligations for digital platforms below dominance are no longer virtual reality

The Bundeskartellamt (case B6-55/20) has looked into Meta combining data from different services without the free consent required by Regulation 2016/679 (the General Data Protection Regulation, GDPR) and Meta has buried the axe in the wake of Regulation 2022/1925 (the Digital Markets Act, DMA) and its national replicants (like pioneering and bespoke Section 19a of the German competition act). This represents a further step in the long-drawn Facebook saga, which has even led to a preliminary request in case C-252/21 Meta v Bundeskartellamt and a specific provision in DMA, Article 5(2).

In case C-252/21, the Court of Justice was interrogated about the possibility for competition authorities to interpret GDPR provisions and the Advocate General opined that they are indeed competent to examine as an incidental question compliance of practice investigated under competition rules with GDPR provisions so long as coordination with data protection authorities in ensured (coordination seems to be the panacea to solve ne bis in idem issues in the latest EU case law – e.g., C-117/20 bpost). The Advocate General also interpreted himself the relevant provisions of the GDPR to conclude that the lawfulness of the processing consisting of the collection of personal data from other group services and third-party websites and apps and their linking with the user’s Facebook account with a view to their use requires either free, specific, informed and unambiguous consent or another lawful basis under Article 6 of the GDPR and that such consent is not necessarily invalid just because the social network provider is dominant (which is to be proven as a matter of causality link under classic abuse case law, which is my view the weakness of the Facebook saga – decision of the Bundeskartellamt in case B6-22/16 and interim order of the Higher Regional Court of Düsseldorf in case VI-Kart 1/19 (V)).

The proceedings in case B6-55/20 started in 2020, when the Oculus Quest 2 headset was launched and Meta’s initial plan was to make its setting up conditional on users’ having a Facebook account, as a classic tying abuse case based on Article 102 of the Treaty of the Functioning of the European Union (TFEU) and the German counterpart (Section 19 of the German competition act). Then, in 2021, Section 19a was introduced in the German competition act tailgating the discussions on the DMA to impose obligations on companies of “paramount significance for competition across markets” (a surrogate for DMA’s “gatekeepers”), among them “linking the use of an offer provided by the undertaking to the automatic use of another offer provided by the undertaking which is not necessary for the use of the former offer, without giving the user of the offer sufficient choice as to whether and how the other offer is to be used” (Section 19(2)(3)(a)) and “making the use of services conditional on the user agreeing to the processing of data from other services of the undertaking or a third-party provider without giving the user sufficient choice as to whether, how and for what purpose such data are processed” (Section 19(2)(4)(a)). The Bundeskartellamt rushed to add these as a grounds to the charges in case B6-55/20, and, later, in May 2022, conveniently designated Meta as a company of “paramount significance for competition across markets” (case B6-27/21).

All the ingredients were there to make an example out of Meta about how its practices can now be criticised under Section 19a without need to discharge the traditional proof requirements facing competition authorities: dominance and, more importantly (since, as I said, this is the true obstacle to be hurdle in the Meta case), the causal link between the “paramount” position and the restrictive result of the leveraging conduct on the market (raising of ecosystem barriers) which needs to be proven between dominance and effects in abuse cases (e.g., C‑457/10 P AstraZeneca, para. 199). Therefore, Meta had little choice but to give new and existing users the option to set up and use a standalone Meta account for using the Quest headsets, which is by the way subject to a stringent standard (smacking of ordo-liberal obsession with choice): selection menus must give users a true choice rather than push them towards additional offers and alternatives must not be more difficult to find or click. Then, the Bundeskartellamt recognised that “the question of when sufficient choice can be deemed to exist also with regard to the flow of data remains open” so Meta committed to abstain, “for the time being”, from allowing for data flow between the virtual reality services and other services without the users’ consent, with the exception of purposes Meta considers as lawful bases (security, Family Analytics, Operational Service Loggings and legal matters), which will be closely monitored.

This case is particularly interesting, in my view, because it shows how DMA-like obligations are tailor-made to tackle competition theories of harm specific to concrete flesh-and-blood cases. These obvious instances of legislators’ pulling competition authorities’ chestnuts out the fire reveal how regulatory short-sightedness fails to factor in well-developed economic theory on contestability and unfairness on digital platforms and risks giving rise not only to type-1 errors (over-enforcement) but also to type-2 errors (under-enforcement) to the detriment of ecosystem integrity, friction-less customer journey or prevalence of efficient competitors. The same goes for the DMA which should rather leave non-obvious cases for competition law which is a more flexible tool witnessing an increasingly fact-based application in the post-Intel renascence of the more economic approach. A further moral of this tale is the risk to uniformity posed by national DMA derivatives which challenge the re-centralisation move underlying competition-based regulation. This will certainly cause rifts because it is doubtful that case-law attempts at striking constitutional balances between exclusively competent regulatory bodies’ powers and national competition enforcement (e.g., C-721/20 DB Station) are transferable to the Regulation 1/2003-like coordination mechanism in Articles 37 to 39 of the DMA.

Author: PabloSD

EU, competition and regulation lawyer with experience in law firms (Uría Menéndez, Slaughter and May) and the CJEU. LLM in EU Law and Economic Analysis from the College of Europe (Bruges), master's degree in European Studies from the University of Seville, bachelor’s degree in law and business from the University of Seville. Currently, antitrust counsel at technology multinational company and lecturer at Universidad Carlos III, Instituto Superior de Derecho y Economía, Universidad de Navarra and Instituto de Empresa. Board member at the Spanish Association for the Protection of Competition (AEDC) and editor at Wolters Kluwer World Competition and EU Law Live. All views, thoughts, and opinions expressed in this blog belong solely to the author, and not to the author's employer or any organisation or institution to which the author is associated.

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