The German Facebook saga: Abuse of dominance or abuse of competition law?Click here to read the full article online
This article provides a critical analysis of the German Facebook case and stresses the limits of competition law. Facebook’s terms and conditions regarding the use of Off-Facebook data were qualified as an exploitative abuse at various stages of the German Facebook proceedings. However, it is far from certain that Facebook would have written its terms any different if it was operating on a competitive market. From an economic viewpoint the market failure at hand is a pervasive information asymmetry rather than market power. Therefore, it is doubtful that the correct response lies within competition law. If competition rules must be rewritten in order to cope with market failures in digital markets, there is a serious risk that the abuse found is not an abuse of market power but an abuse of the market power provisions in competition law. Alternative routes that can be found in consumer contract, unfair competition or data protection laws might be viable options. The latter rules can be applied without a complicated finding of causality between market dominance and the use of ‘unfair’ contract terms. Admittedly, also the information paradigm can be called into question but amending rules of contract law avoids Herculean interpretations of competition law that go against a broadly supported ‘more economic approach’. Abusing competition law or enhancing contract law to improve the efficiency of digital markets, that is the question.