Recent Developments in Competition Law Practices Regarding Digital Markets
Introduction
Competition authorities around the world continue unabated to investigate competition concerns arising from data collection and processing activities of digital platforms and impose severe sanctions as a result. The recent interim measure imposed by the Competition Board (the Board) against Meta Platforms Inc. (META) for data merging activities between Instagram and Threads applications[1], and the daily administrative fine imposed by the Board for data collection activities on Facebook, Instagram, and WhatsApp services[2], demonstrate the Board’s unwavering and stringent stance on this issue. The Board’s decision on interim measures and daily administrative fines indicate that digital platforms will need to implement even more rigorous measures in the future with regard to the processing of user data and the options provided to users.
The Board’s Enforcement Decision on Instagram-Threads Data Merging Application
In July 2023, as a result of a preliminary investigation[3] concerning the allegations that Meta Platforms Inc. (META) violated Article 6 of the Law No. 4054 on the Protection of Competition (Law No. 4054) by linking its newly launched Threads application with the Instagram application, the Board deemed the findings to be significant and decided to launch an investigation against META[4]. In terms of the tying allegations brought because users cannot delete their Threads accounts without first deleting their Instagram accounts due to the integration of Threads and Instagram, the Board decided that there was no need to issue a interim measure against META, as a result of the update that allows both accounts to be deleted independently as of November 2023. On the other hand, upon the finding that the data obtained by META through the Threads application was combined with the data obtained from the Instagram application, the Board decided to examine the data merging practices in detail within the scope of the investigation. As a result of such examinations, the Board decided to impose an interim measure on META under the fourth paragraph of Article 9 of Law No. 4054 until the investigation is completed, by evaluating that, otherwise the practices for merging users’ Threads and Instagram data will cause irreparable damages[5] . The Board’s assessment of the interim measure is analyzed in this article.
The Board’s Assessment On The Interim Measure Decision
In its interim measure decision, the Board evaluated the importance of data in digital markets. In this context, it was stated that large platforms utilize the data provided by consumers in exchange for seemingly free services to track their behavior, which is then used to attract advertisers and commercial users, providing the platforms with enormous power. The decision emphasizes that digital markets are prone to monopolization due to their structure, therefore, it is important to avoid reinforcing structural barriers in the market through the conduct of undertakings and to keep entry and growth barriers to a minimum.
According to the Board, in digital markets, the fact that undertakings offer services in multiple related markets is a driving force that encourages users to stay in the relevant undertaking’s sphere of influence. While these ecosystems created by undertakings simplify users’ choices, they also create barriers to entry for competitors that do not have similar tools. In addition, user data is critical for online advertising, as digital platforms often offer their services free of charge to users while trying to generate revenue by providing inventory to advertisers. Therefore, data merging activities can give online platforms a competitive advantage over their competitors and create a barrier to entry for competitors that do not hold similar capacity.
Based on the above-mentioned evaluations regarding the importance of data on digital platforms, the Board concluded that META, which is considered a gatekeeper under the Digital Markets Act (DMA) in the European Union (EU) and has a special obligation not to merge the data obtained from its various services without the explicit consent of end users, is in compliance with the DMA in terms of data obligations, given the fact that it was able to put the Threads application into service in the EU as of 14 December 2023.
On the other hand, it is observed that user data may emerge during the profile creation phase of Threads in Türkiye, as users create their Threads profile based on their Instagram accounts, which is allowed due to the merging policies of Threads and Instagram applications. In a similar vein, data from Threads may be transferred to Instagram on the grounds of personalizing and improving experiences on Instagram and increasing security. In this context, the Board also mentioned that a user who forgets to log out of his/her Threads account may collect various information such as which articles he/she reads at which times of the day. In this context, the Board referred to the measures imposed on META with its decision dated 20.10.2022 and numbered 22-48/706-299, and determined that META’s behavior of continuing to combine user data obtained from Instagram and Threads applications constitutes a serious indication of a violation under Article 6 of Law No. 4054. In its findings, the Board also referred to the investigation conducted by the German Competition Authority (Bundeskartellamt) into the data merging practice between META's Oculus product and Facebook, which focused on the need to provide users with sufficient choice in the data processing policies for these two different types of services and for what limited purposes it is permissible to continue to merge their data without their consent.
In light of the above assessments, the Board considered that the data aggregation between Instagram and Threads will serve to maintain and further strengthen META’s current position in the market while the investigation is ongoing. In addition to its exclusionary effects on competitors, it is argued that requiring users to accept the terms of use and privacy policies that allow data transfer between the two platforms before using the Threads application may limit consumer choice. Therefore, regarding the data merging behavior, which is regarded as a violation with the Board’s decision dated 20.10.2022 and numbered 22-48/706-299, interim measure was applied until the final decision on the investigation is made, to deter the merging of the data obtained between the Threads and Instagram and to prevent irreparable damages. Compliance with this interim measure is of utmost importance. So that in case of failure to fulfill these obligations, META may be subject to daily administrative fines under Article 17 of Law No. 4054.
In fact, with its decision dated 20 October 2022 and numbered 22-48/706-299, the Board recently decided to impose an administrative fine of TL 4,796,152.96 per day on META for failing to comply with its obligations under the compliance measure applied in relation to the merging of data between Facebook, Instagram and WhatsApp services. The Board imposed an administrative fine based on the fact that the on-screen notifications presented to users for their preferences regarding the sharing of their data between Facebook, Instagram and WhatsApp services was considered insufficient to address anti-competitive concerns raised in the investigation, as they were found to be insufficiently transparent, did not contain enough information and the screen was designed to induce users to consent to data sharing. Thereupon, the Board decided to impose an administrative fine over the gross revenues of 2022 for each day starting from 12 December 2023, until the compliance measure to be proposed by META is submitted to the Authority[6] .
Conclusion
The decision of the Board to impose interim measures and daily administrative fines on META demonstrates the competition authorities' strict and serious stance towards the data aggregation practices of digital platforms. This is because interim measures and daily administrative fines are among the most severe sanctions that can be imposed by the Board, and the imposition of daily administrative fines is an extremely rare type of sanction in practice. In the future, it is inevitable that digital platforms, particularly META, will need to take even stricter measures regarding the methods of processing user data and the options offered to users.
- The Board’s decision dated 08.02.2024 and numbered 24-07/125-50
- For the announcement text regarding the Board's decision dated 10.1.2024 and numbered 23-60/1162-417, see https://www.rekabet.gov.tr/tr/Guncel/meta-hakkinda-yukumlulukleri-yerine-geti-a64c6f01a9afee118ecc00505685da39
- The Board’s decision dated 03.08.2023 and numbered 23-36/667-M
- The Board’s decision dated 23.11.2023 and numbered 23-54/1031-M
- The Board’s decision dated 08.02.2024 and numbered 24-07/125-50
- For the Announcement of the Board Decision Regarding META's Failure to Fulfil its Obligations, see https://www.rekabet.gov.tr/tr/Guncel/meta-ya-gunluk-4-7-milyon-tl-idari-para-cezasi--762e5db1f4e4ee1193c80050568585c9
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