(Bloomberg Opinion) -- German courts, regulators and legislators are deeply suspicious of Big Tech’s business practices. Yet it’s hard to shake the feeling that, when they intervene to fix them, they only skim the surface of what’s wrong with the internet majors. That’s not necessarily wrong, either.
Take, for example, Facebook’s practice of collecting data from third-party websites that have embedded the social network’s “Like” buttons. The information is harvested from users who don’t even click on the button, and even from those who don’t have Facebook accounts.
On Monday, the European Court of Justice, the European Union’s highest judiciary body, ruled that websites running the button are jointly liable for Facebook’s data collection. (A court in Duesseldorf had referred the case, brought by a consumer rights organization, to the ECJ in 2017.) If a website – like the German e-commerce site Fashion ID, which features in the original complaint – decides to display the button so it can promote its wares on Facebook, that makes it, alongside the social network, a “data controller” under European privacy regulations. That means it must tell visitors what data it’s collecting for Facebook, and for what purposes, and get their consent.
In February, the German antitrust regulator, the Bundeskartellamt, lashed out at Facebook’s data collection from third-party sites, demanding that it get users’ consent for it. Facebook appealed that decision. Now the ECJ, whose ruling is final, appears to have sided with the regulator.
What, however, do users get out of this? Likely another annoying pop-up asking them to agree to yet another kind of data collection. Last year, Quantcast, the U.S.-based adtech platform that implemented the EU’s new privacy consent forms for many U.S. and U.K. sites, reported that 81% of users say yes to all such pop-ups. The potential loss of the other 19% likely won’t be worth dropping the “Like” button, except for sites with especially privacy-conscious audiences. The data collection will go on largely unabated.
Or take another recent German intervention. Last week, the Federal Court of Justice, the highest German court for civil and criminal law, upheld the complaint of Ortlieb Sportartikel GmbH, a relatively small but nationally beloved producer of bicycle saddlebags, against Amazon. Ortlieb discovered that when people do a Google search for “Ortlieb bicycle bags” in German, one of the top results will be an Amazon link – to a page where other brands’ bags are represented next to Ortlieb’s. The court found that to be an infringement on the small company’s trademark, because its brand is effectively used to advertise its competitors.
Even the most generous fix for the problem, however, won’t really change much in terms of sales; people who want an Ortlieb bag are, of course, aware of the existence of competitors, and if they wanted a different product, they probably would have kept the brand out of their search request. The competing products will always be just a click away. The complaint and the ruling reflect an irritation with the way Amazon does business, and the e-commerce giant may be forced to make annoying changes to its algorithms by way of revenge. But fundamentally, it won’t cease to be a huge marketplace on which individual brands play second fiddle to the retailer itself – and it’ll likely sell more bicycle bags than the manufacturers’ own sites.
The Bundeskartellamt has also taken Amazon to task, and it recently announced a deal with the company whereby Amazon agreed to improve the way it treats third-party sellers on its platform. It’s a praiseworthy example of cooperation between Big Tech and European regulators – but the changes themselves are relatively minor: The regulator didn’t demand that Amazon choose between being a retailer and a marketplace.
Even Germany’s much talked-about law requiring Facebook, Twitter, YouTube and other content platforms to take down hate speech quickly or face large fines is an example of annoying but not particularly effective intervention. Last year, only 8,617 complaints were made about offending content, and just 3,096 were found justified. There’s much more hateful content out there – it’s just that few people take the trouble to report it to the authorities.
Truly groundbreaking regulation would make the social networks legally liable for all the content they publish and restrict their data collection to their own websites. It would force Amazon to stop sitting on two chairs and spin off either its marketplace or its own retail operation. But German regulators, courts and legislators avoid such drastic moves, even though they do more to engage Big Tech than their colleagues in other European countries. Germany doesn’t want to lead the world in tech regulation; that’s really up to the U.S. while the global tech companies are American.
What the various German agencies and courts are really doing is trying to establish a two-way street with the tech giants, a pattern of cooperation like in the Amazon-Bundeskartellamt case. The proper answer to these attempts on the part of the tech companies is to negotiate solutions to various minor issues rather than to fight the challenges every step of the way; the big battles will be fought in the U.S.
To contact the editor responsible for this story: Tobin Harshaw at tharshaw@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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