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Facebook is NOT free and users shall be made aware of paying with their personal data

The Italian Administrative Supreme Court held that Facebook misled its users representing its social media as free, while users’ personal data were the actual consideration for the service.

The € 10 fine issued against Facebook for unfair commercial practices

The Italian Antitrust Authority (AGCM), which has jurisdiction in Italy also for unfair commercial practices under the relevant EU Directive, had issued a € 10 million fine against Facebook in 2018 for the unfair commercial practices perpetrated since the social media

  • would not adequately and immediately inform user, during the activation of the account, of the activity of collection and use, for informative and/or commercial purposes, of the data that he gives, making him aware only of the free use of the service, to induce him to make a decision that he would not otherwise have taken (registration and permanence on the platform)“; and
  • substantiated in the exercise of “an undue conditioning towards registered consumers, who, in exchange for the use of Facebook, would be forced to allow Facebook/third parties to collect and use, for informative and/or commercial purposes, data concerning them in an unconscious and automatic way, through a system of pre-selection of consent to the transfer and use of data.”

Both points are relevant since they mean that Facebook is not actually a free service since users are obliged to grant in exchange the authorization to use their personal data for commercial purposes, and the pre-set opt-in to the commercial exploitation of data is an aggressive commercial practice.

Facebook’s appeal against the fine and the concept of data as a tradable asset

Facebook had first appealed the case before the Italian administrative court of first instance, and now before the Italian Administrative Supreme Court (the “Consiglio di Stato“) that rejected the appeal in full.

According to the Italian court, the social network suggests that it is possible to immediately and free of charge obtain the benefits offered by the platform, but omits to communicate that, instead, this can only happen if – and until – user’s data are shared with third-party business partners for profiling and marketing purposes.

In particular, the Consiglio di Stato challenges Facebook’s interpretation under which since data cannot be traded by individuals, rules on unfair commercial practices should not apply to it. According to the court, “the capitalization of personal data, which in this case occurs unwittingly, is the result of the intervention of companies through the provision of data – and user profiling – for commercial purposes.“. As such, regardless of the qualification of data as a tradable asset, it is a matter of fact that businesses use them for commercial purposes.

Consistently, on the convergence between consumer and data protection law, the court held that “when the data processing affects and involves behaviors and situations governed by other legal sources for the protection of other values and interests (as important as the protection of data referable to the individual), the system – first EU and then domestic – cannot allow any expropriation application of other disciplines, such as that, for the case here, the protection of the consumer, reduce the protection guaranteed to individuals. Therefore, the prevailing need is to ensure “multilevel protection” to exploit the data made available by the user in favor of third parties, providing adequate information to the interested user-consumer on the use of the “computer platform.” Thus, if a data processing activity implies an unfair commercial practice, both data and consumer protection laws would apply with a potential double fine.

Yet, the Administrative Supreme Court underscores how Facebook induces users to believe that it is possible to obtain immediately and easily, but above all “free” the advantage connected to the reception of the typical services of a social network without economic charges, omitting to communicate that, instead, this will happen (and will be maintained) only if (and until) the data will be made available to commercial subjects not definable in advance and operating in sectors also not pre-indicated for purposes of commercial use and advertising diffusion. This is enough for the court to confirm AGCM’s evaluations.

Against the promised free service, the Consiglio di Stato believes that users are induced to access Facebook to obtain the “immaterial” advantages of joining and being involved in a social network. Although the processing of the data provided can be interrupted by revoking consent, this can only occur later and against a widespread indication of the consequent disadvantages.

My feedbacks and open questions from the Facebook case

Giulio CoraggioThe reproach addressed to the social network would consist in not having informed users, who in this case are technically transformed into a “consumer” for unfair commercial practices rules, of the “quid pro quo” connected to involvement in the social network: automatic profiling for commercial use, not clearly and immediately indicated at the moment of first access.

The feedback from the decision is that a potential data protection breach might lead to challenges and fines both under privacy and consumer protection rules, leveling up the risk exposure. Indeed, in the scenario above, data protection authorities might argue that the privacy-related consent to the processing of personal data was not valid since the “quid pro quo” rule implies a limitation to the freedom of choice.

On a similar topic, you may find interesting the article “Legitimate interest, performance of contract and privacy consent under the GDPR.”

Image courtesy Jason Thibault

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Giulio Coraggio

I am the head of the Italian Technology sector and the global head of the IoT and Gaming and Gambling groups at the world-leading law firm DLA Piper. IoT and artificial intelligence influencer and FinTech and blockchain expert, finding solutions to what's next for our clients' success.

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