Week in Review (8 February)
German competition regulator targets Facebook’s advertising model
A 7 February decision issued by Germany’s competition authority is the first time that data protection principles have been invoked to justify a competition law finding. The authority has found that the precondition of Facebook’s terms and conditions, that users can only access the network if Facebook can collect user data across the internet and on smartphone apps, is in breach of competition rules. Under the ruling, Facebook will instead need to gather clear consent for the gathering of data from each source.
The potential limiting effect on the gathering and combination of data poses a challenge to the Facebook business model, which is based on the creation of dedicated user profiles and their sale to advertisers. Companies such as Google and Amazon also monetise data in this manner and will be anxious that the German case could set a precedent.
Facebook has been given 12 months to implement the decision. The company is also certain to file an appeal with the Düsseldorf Higher Regional Court. Appellants to the court also have the right to ask that a decision be suspended while the appeal is being heard. We expect that Facebook will make use of this right although the request is not certain to be granted.
Commission Winter Forecasts expect slowing EU growth
The European Commission’s Winter 2019 Economic Forecast was published on 7 February. The publication came on the heels of reams of economic data suggesting that the European economy has been slowing and – in the case of Italy – has entered into recession. The headline projections in the Commission documents reflect these worsening economic conditions, with downgrades made to expected growth across the coming years. The country specific projections also contained some substantial downward revisions. From a Eurozone perspective, the most significant of these concern Germany and Italy.
While the German slowdown is due in part to the slowdown in China and uncertainty facing the automotive industry, the Italian slump has been driven – at least in part – by political risk and an attendant rise in borrowing costs.
Pedro Sanchez branded a traitor for Catalan overture
The difficulties of Spain’s minority government in gathering sufficient votes for legislation have been evident in Pedro Sanchez’s efforts to pass a 2019 budget, which has been repeatedly delayed. The most recent hitch came in the last week, when Catalan separatists declined to support the budget. This led to Sanchez agreeing to a long standing separatist demand to appoint a facilitator for talks between the government and separatist parties.
Sanchez’s concession has been met with a furious reaction from other Spanish parties, who are planning a mass rally in Madrid on Sunday. Sanchez has previously suggested that if he cannot get it through parliament, he will consider an election. The events of the last week have increased this possibility, as Sanchez now faces the prospect of having to climb down on his Catalan concession, thereby sacrificing the budget, or – confronted with mass right wing anger – feels compelled to go to the polls in any case.