Facebook’s parent company Meta is the target of a major class-action lawsuit in the UK over claims it abused its dominant market position to exploit the personal data of British users.
The suit is being brought by Dr Liza Lovdahl Gormsen, a senior research fellow at the British Institute of International and Comparative Law and director of its Competition Law Forum, on behalf of 44 million UK Facebook users the suit says paid an “unfair price” for using the platform.
“In a free and fair market, competition should lead to lower prices and increased quality”, said Lovdahl Gormsen. “But the bigger a company is in the market, the less choice we have, no matter what else they’re doing. Facebook has exploited its dominance at its users’ cost.”
The case will fall under the UK’s Competition Act, and Lovdahl Gormsen’s lawyers seek compensation of at least £2.3 billion, plus interest, for those they say were impacted by the company’s practices between October 2015 and December 2019.
Facebook, the suit posits, imposed “take it or leave it” terms and conditions on users, extracting their data to build detailed profiles, which were then used to generate profit.
This, it is argued, disadvantaged users who “received only ‘free’ access to Facebook’s social network, and zero monetary recompenses whilst Facebook generated billions in revenues from its users’ data. This unfair deal was only possible due to Facebook’s market dominance.”
“People access our service for free”, a Meta spokesperson said in reaction to the suit. “They choose our services because we deliver value for them, and they have meaningful control of what information they share on Meta’s platforms and who with. We have invested heavily to create tools that allow them to do so.”
The case is an opt-out class-action suit, meaning users do not need to join in seeking damages proactively. Unless they choose not to be, anyone who logged onto a Facebook account in the UK during the specified period is included in the case.
Lovdahl Gormsen launched the suit following a July 2020 report by the Competition and Markets Authority (CMA), the UK’s antitrust watchdog, which highlighted the market power of companies such as Facebook and Google. The report noted that both use default settings to encourage people to give up their data, with the former requiring acceptance of personalised ads as a condition of use.
It also proposed the creation of a Digital Markets Unit within the CMA to focus on the position and potentially anti-competitive practices of tech giants and encourage choice for users when it comes to offering up their data.
Facebook’s business model, Lovdahl Gormsen told EURACTIV, has long been centred on targeted advertising, requiring user data collection.
“Users are providing quite a valuable input to that business model without being compensated”, she said, speaking of her reasons for launching the suit. “When you are a dominant player in the market for social networks, that kind of exploitation should not be happening.”
“The lack of transparency and asymmetric relationship between Facebook and its users is quite prominent in this case”, she added. During the period covered by the suit, personal data was collected via third party websites, not just the Facebook platform itself, something many users are not aware of.
For Gormsen, consumer exploitation has been the “blind spot” of competition law, which mainly focuses on excluding competitors from the market.
The suit will soon be filed before the UK’s Competition Appeal Tribunal, which will consider whether to allow the case to proceed to trial.
[Edited by Luca Bertuzzi/Alice Taylor]