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22 November 2023

The Long-Awaited Meta (Facebook) Decision Finally Published

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On 11 January 2021, the TCA initiated an investigation against Facebook Inc., Facebook Ireland Ltd., WhatsApp Inc., and WhatsApp LLC to ascertain whether there had...
Turkey Media, Telecoms, IT, Entertainment

On 11 January 2021, the TCA initiated an investigation against Facebook Inc., Facebook Ireland Ltd., WhatsApp Inc., and WhatsApp LLC to ascertain whether there had been a violation of Article 6 of Law No. 4054 on the Protection of Competition (“Law No. 4054”) concerning the obligation to share data with WhatsApp users pursuant to Article 40 of Law No. 40541 . The reasoned decision regarding the allegation that Meta Platforms, Inc. (formerly Facebook Inc.), Meta Platforms Ireland Limited (formerly Facebook Ireland Limited), WhatsApp LLC, and Madoka Turkey Bilişim Hizmetleri Ltd. Şti. violated Article 6 of Law No. 4054, which regulates the abuse of dominant position, was published on the official website of the TCA on 11 September 2023.

The Board's Decision

The Board unanimously found that Facebook's economic unity, comprising Meta Platforms, Inc., Meta Platforms Ireland Limited, and WhatsApp LLC, holds a dominant position in the markets for personal social networking services, consumer communication services, and online display advertising. It was also unanimously decided that by amalgamating the data collected by the so-called basic services of Facebook, Instagram, and WhatsApp, a restriction on competition was created, violating Article 6 of Law No. 4054 by hindering the activities of its competitors operating in the personal social networking services and online display advertising markets and by establishing a barrier to entry therein.

Pursuant to the provisions of the Regulation on Fines, it was resolved to impose an administrative fine of TRY 346,717,193.40 on Meta Platforms, Inc., Meta Platforms Ireland Limited, and WhatsApp LLC jointly and severally, based on the annual gross revenues generated at the end of the fiscal year 2021 and determined by the Board.

The decision evaluated the alleged data merging as an exclusionary abuse and analysed its impact in both the social networking and online display advertising services markets. It was discerned that the data in question is crucial for the provision of both social networking and online advertising services and that it is not feasible for competitors to create or access a data set equivalent to the one amalgamated by Facebook. This scenario was recognized as creating an entry barrier in both markets. It was noted that due to Facebook's data combining, advertisers prefer to utilise the advertising mediums on Facebook, while the access of competing publishers, including competing social networking service providers, to advertisers has been curtailed.

In light of the foregoing, the following obligations have been imposed on Facebook: (i) to submit the necessary measures to the Authority within 1 (one) month at the latest from the notification of the reasoned decision, (ii) to implement the necessary measures within 6 (six) months from the notification of the reasoned decision, and (iii) to submit annual reports to the Authority periodically for 5 (five) years from the commencement of the implementation of the first compliance measure, subject to dissenting opinions of several Board members.

Dissenting Opinions

Various members of the Board voiced dissenting opinions and proffered different rationales for the decision. In one such dissenting opinion, the Board members contested the decision to delegate the implementation of the remedies to the investigated party. They posited that entrusting the remedies to the discretion and guidance of the investigated party, and postponing them by stipulating a deadline in the decision, perpetuates the existing competition restriction effects, while concurrently obstructing the swift implementation of an effective remedy. In this vein, the Meta Group will concurrently continue to augment its market power through the data and integration within its ecosystem, and will further fortify the efficient barriers to entry and expansion, thereby favouring data-driven incumbents. The dissenting opinion articulates that since structural separation in digital markets serves as the most efficacious solution to remove the motivational structure causing the behaviour, the remedy envisaged in the decision should encapsulate the following:

  • Cease the merging of data collected by Facebook, Instagram, WhatsApp, and Messenger services, the so-called core services, and technically segregate such data,
  • Restrict the utilization of data amassed through each core service solely to the enhancement of that core service and the online advertising marketplace proffered through that service,
  • Archive the data collected under each core service in separate databases.

Conversely, another Board member, whilst concurring with the infringement finding and the fine imposition, forwarded a disparate rationale contending that the infringement duration should not be factored into the fine assessment in this instance. The decision revealed that Facebook has been exploiting WhatsApp's data since 2016, establishing a more than five-year span of cross-use data behaviour between the two companies. Consequently, the basic fine amount was augmented “by a multiple” pursuant to Article 5(3) of the Regulation on Fines. In this context, the Board member argued that since the infringement pertains to the abuse of a dominant position through data amalgamation and utilization to thwart competitor activities and erect market entry barriers, the information and findings within the investigation file fall short of conclusively demonstrating that the infringement commenced the moment WhatsApp data was shared with Facebook. The Board member contended that it isn't the data collection or usage that constitutes the infringement, but rather the complication wrought upon competitor activities and the erection of market entry barriers. They concluded that the precise extent to which previous data collection and usage either constitutes a competition element or an abuse of dominant position would solely be ascertainable through the Authority's detailed examination and decision.

Implications for the Industry and Digital Platforms' Future

This decision holds significance for evaluating data combining as an exclusionary abuse under Article 6 of Law 4054, and the theory of harm concerning data combining's exclusionary effects. The investigation scrutinized the effects of Facebook's ongoing data collection and combining activities in terms of market foreclosure or complicating market entry for competitors, considering these effects distinctly concerning the online advertising market and the social networks market. It's noteworthy that this decision accentuates the duty of undertakings in fostering fair and equal competitive practices. It transcends merely imposing hefty fines, extending to terminating violations and cultivating a healthily competitive market environment. Additionally, this decision ranks amongst the paramount decisions analysing the nexus between competition law and Personal Data Protection Law No. 6698 (“Law No. 6698”), alongside the intervention domains where Law 4054 and Law No. 6698 intersect, coupled with the interests they safeguard. In this regard, this decision beckons undertakings to prioritize transparent, fair, and competitive practices.

Footnote

1. The investigation was initiated to assess Facebook's update, slated to take effect on 8 February 2021, requesting permission to utilise the data of WhatsApp users in Türkiye in the context of other Facebook services, within the scope of Article 6 of Law No. 4054. However, following the decision to initiate the investigation, it was revealed that the data transfer in question had been ongoing since 2016 and that the aforementioned update would not alter the nature or scope of the said data transfer. Subsequently, with the decision of the Board dated 11 March 2021 and numbered 21-13/162-M, the scope of the investigation was broadened to include “determination of whether the use of the data obtained in Türkiye within the framework of each product and service offered by Facebook Inc., WhatsApp LLC, Facebook Ireland Limited, Madoka Turkey Bilişim Hizmetleri Ltd. Şti., within the framework of other products and services offered by companies of the Facebook group, including the aforementioned companies, violates Article 6 of Law No. 4054”.

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