On 6 December 2019, the Hungarian Competition Office ("GVH") found that Facebook’s practice of referring to its services as “free” on its cover page and Help Centre misled Hungarian users. As a consequence, the GVH held that Facebook violated the Hungarian Unfair Commercial Practices Act ("UCPA") (which implements the EU’s Unfair Commercial Practices Directive). The Competition Council imposed a fine of HUF 1.2 billion (approx. EUR 3.6 million) on Facebook for such conduct.
The GVH launched its investigation in October 2016 and delivered its decision on 6 December 2019. The investigation centred on one specific unfair commercial practice: falsely describing goods or services as “free”. In particular, the investigation focused on the accuracy of the following statements: “it’s free and anyone can join” and “it’s free and always will be”.
The GVH found that Facebook’s services were “free” in the sense that Facebook did not charge an actual fee for access to its services. However, the GVH also held that allowing access to one’s data is inherent to using Facebook’s services. The GVH described Facebook’s business model as “a zero price model” where users offer their data in exchange for access to Facebook. The essence of this model is that Facebook attracts users with its content and collects information on users’ interests, behaviour and purchasing habits. Such user information is then used to sell targeted advertising to Facebook clients. The GVH concluded that although Facebook users do not pay for access to Facebook by monetary means, they nevertheless pay for access to Facebook through their data. Due to the presence of such “payment” by the users, the GVH held that Facebook falsely claimed that its services were “free” to use.
The fine on Facebook is the largest ever imposed by the GVH for an infringement of the UCPA in Hungary.