Facebook (FB - Free Report) reportedly landed in trouble with German authorities over its unrestricted use of customer data without their consent.
Per a Bloomberg report, a top German civil court has ordered the social media giant to curb data collection from users’ browsing history as well as other smartphone apps. The court stated that Facebook has abused its dominant position in the market to gather information without consent.
The company had initially come under fire from the German Federal Cartel Office in February 2019. The office mandated that Facebook will only be allowed assign data from WhatsApp or Instagram to its main Facebook app accounts if users consented voluntarily. The company is still fighting the ruling in a lower court.
Facebook stated that it will continue to fight the order in the Dusseldorf court where the original case is still pending. However, the company needs to comply with the court’s order. It has four months to find out ways to manage restrictions on data collection in Germany and another 10 months to implement the changes.
The ruling is expected to have major ramifications as Germany is the first country to use antitrust law to ensure data privacy.
Facebook, Inc. Price and Consensus
Facebook’s Antitrust Troubles Mounting
The ruling is the latest in a long list of antitrust investigations against Facebook. Recently, both U.K. and Australia launched investigations into its acquisition of Giphy. The investigations will review whether the deal will provide Facebook with data that will strengthen its position in the market and help establish dominance.
In April, the Federal Trade Commission (“FTC”) ordered the company to pay a fine of $5 billion as the FTC felt that Facebook could have done more to prevent Cambridge Analytica from siphoning off the data of up to 87 million users.
Further, Facebook is facing a multistate antitrust investigation led by New York over its ad pricing practices.
These investigations have revealed a chink in Facebook’s armor. Rising privacy issues and data collection related headwinds doesn’t bode well for this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Major Tech Companies Under Scrutiny
Facebook is not the only technology company to have come under the scope of antitrust investigations. Alphabet’s (GOOGL - Free Report) Google division, Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) have found themselves in troubled waters.
The Wall Street Journal recently reported that U.S. Justice Department and a group of state attorneys general are planning to file antitrust lawsuits against Google in the coming months. The investigation will focus on Google’s alleged search bias, advertising and management of Google’s Android operating system.
Recently, the European Union opened a formal antitrust investigation against Apple to determine if the terms that the company imposes on app developers violate competition rules.
A House Judiciary subcommittee is expected to conclude its year-long investigation into Apple, Amazon, Google and Facebook over potential antitrust practices, with a report expected shortly.
Per Washington Post, on Jun 16, Facebook CEO Mark Zuckerberg and Google CEO Sundar Pichai signaled they are open to testifying to Congress as part of lawmakers’ ongoing antitrust probe into the tech industry, while Apple has not yet explicitly agreed to send its leader.
Moreover, the European Union is planning to file charges against Amazon over its treatment of third-party sellers.
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