Privacy setting shortcuts are displayed on Apple Inc. iPhone 6 smartphone screen as a FaceBook Inc. logo is seen in this arranged photograph taken in London, U.K. (Photographer: Chris Ratcliffe/Bloomberg)

Facebook Emails Could Lead to Tougher EU Regulatory Scrutiny

(Bloomberg) -- Facebook Inc. emails showing the company threatened to cut off data to potential rivals added a new target for the regulatory armory that is being amassed by European regulators.

The publication of the emails by U.K lawmakers preceded a vote by EU legislators Thursday that backed draft rules requiring online platforms to treat businesses -- including rivals -- fairly.

In the new year, Germany will conclude an antitrust probe that may call on Facebook to change privacy terms. EU privacy regulators are also armed with the power to fine for data breaches, following the roll-out of GDPR in May.

The revelation of the emails "confirms something is rotten in how Facebook treats consumers’ data," said Ramon Tremosa, a member of the European Parliament. It "clearly raises a few questions about how Facebook treats users’ data and their policies for working with app developers."

A trove of internal correspondence, published online Wednesday, provided a look into the ways Facebook executives, including Chief Executive Officer Mark Zuckerberg, treated information posted by users like a commodity that could be harnessed in service of business goals.

Apps were invited to use Facebook’s network to grow, as long as that increased usage of Facebook. Certain competitors, in a list reviewed by Zuckerberg himself, were not allowed to use Facebook’s tools and data without his personal sign-off.

The message may increase scrutiny around whether Facebook is a monopoly -- one of the social network’s biggest current political risks. Damien Geradin, a Brussels-based lawyer at Euclid Law, said the refusal of access to Vine data could be seen as a potential refusal to deal with rivals. He said Facebook would need to be shown as essential to users, and it‘s "not clear it is."

Tim Wu, a professor at Columbia Law School, said the emails "suggest exclusionary conduct" against Vine and "clearly add to the case that the acquisition of WhatsApp was illegal," according to a Twitter post.

The Facebook emails “are another reminder of the importance of data to stand a chance in today’s digital markets," said Agustin Reyna of European consumer advocacy organization BEUC. "It also shows the need for policy tools to tackle data-access restrictions" to "ensure that firms can access data from" large firms to develop rival products.

New legislation might require Internet giants to treat rival services "equally without discrimination" with some exceptions, according to rules voted by EU lawmakers on Thursday. Their version still needs to be backed by the full European Parliament, likely next week, and then the final text of the law must be negotiated with EU governments.

Germany already sees Facebook as the country’s dominant social network, which puts the company on warning. The German Federal Cartel Office probe focuses on the way the social network scoops up information on how users surf the web. Any changes required by regulators may affect its ability to sell useful ads on the network.

The power internet giants wield with access to user data and the ability to crush rivals by cutting off links to it, is increasingly a focus for European regulators. Both the EU and Germany are looking at how Inc. treats sellers on its platform, with the EU zeroing in on the advantage it gets on rivals’ bestselling items to check if it then starts selling its own-brand copycats.

Microsoft Corp. and Apple Inc. got scrutiny over how they might choke off rivals’ access in EU probes of their takeover plans. Facebook escaped a long probe from the EU over the deal but was later fined 110 million euros ($124.6 million) for failing to disclose how it could link data between services.

Privacy officials are also showing impatience with Facebook, with British Information Commissioner Elizabeth Denham telling the U.K. Parliament that the company needs to significantly change its business model and practices. Her office has led the European investigations into how data of millions of Facebook users, mostly in the U.S. and U.K., could have ended up in the hands of Cambridge Analytica, a consulting firm that worked on Donald Trump’s U.S. presidential campaign.

©2018 Bloomberg L.P.