On 4 May 2022, the Federal Cartel Office (FCO) classified Meta Platforms Inc as an undertaking with paramount significance for competition across markets. Thus, following a similar decision against Google and Alphabet Inc at the end of 2021, the FCO has now subjected another large digital group to the special abuse control of section 19a(1) of the Act against Restraints of Competition (ARC).
Section 19a of the Competition Act (GWB) was included in the ARC when the 10th GWB amendment was made. The aim of this provision is to enable the FCO to take faster and more effective action against the large companies in the digital economy. As soon as the FCO has determined a company to be of paramount significance for competition across markets, it can prohibit the companies in a second step from certain conduct that could endanger competition. The aim is to ensure functioning competition despite the "gatekeeper" function of the large digital companies.
Meta, as an internationally active digital group, earns it popularity from Facebook, Instagram and WhatsApp. The FCO estimates that 3.5 billion people globally use Meta products. In Germany alone, approximately 83% of all internet users use the messenger service WhatsApp. Due to this number of users, Meta collects a vast amount of data. In addition, Meta is the leading provider in the area of social media advertising and is constantly expanding its offering. A current major project is the so-called "metaverse", a virtual 3D world for with numerous accompanying software and hardware.
The FCO considers the services that Meta offers to be so "comprehensive" that the president of the FCO, Andreas Mundt, described them collectively as a "digital ecosystem". According to Mundt, Meta is "the key player in social media. Our investigations have shown that Meta is of paramount significance across markets, also within the meaning of competition law".
Meta stated that it accepted its position as a norm addressee of section 19a(1) of the ARC and will not appeal against this.
Further proceedings against Meta
Due to competition concerns, the FCO already prohibited Meta on 7 February 2019from aggregating user data from different sources at the beginning of 2019. The legal dispute with Meta regarding this decision is still pending before the courts today. In addition, the FCO announced in a press release that it has been conducting proceedings against Meta since 2020 due to the connection between Meta Quest (formerly Oculus) 3D glasses and Facebook.
In the wake of its Alphabet/Google decision, the FCO has found the next large digital group to be of paramount significance for competition across markets.
It is expected that the FCO will follow this by prohibiting Meta, Google and Alphabet Inc from certain conduct.
The European Commission is also carrying out stricter monitoring and investigating both companies, as Competition Commissioner Margarethe Vestager recently emphasised. In these investigations, special attention is similarly being paid to abuse of the companies' gatekeeper function in the respective markets. Further, the risks associated with a digital economy dominated by a few corporations are increasingly attracting the attention of the competent authorities.
The decisions of the FCO against Apple and Amazon with regard to section 19a of the GWB are still pending. However, in view of the reasons that have led to the above decision, it is expected that these companies will also be found to be of overriding importance across the market.
For further information on this topic please contact Sascha Dethof or Raoul Schätzler at Fieldfisher (Germany) LLP by telephone (+49 211 950 749 0) or email ([email protected] or [email protected]). The Fieldfisher (Germany) LLP website can be accessed at www.fieldfisher.com.