Meta's VR remains under scrutiny for antitrust abuses in Germany

Germany’s Federal Antitrust Office (FCO) claims credit for Meta untying its virtual reality headset from its social accounts — a change in direction the company announced in Augustwhen it began rolling out Meta Accounts and Meta Horizon Profiles, stating that these accounts could be used to log into its VR products instead of Facebook and Instagram logins (while still allowing the latter options as user choice).

However, despite winning this concession from Meta, the Bundeskartellamt doesn’t close the exploration of its VR offerings. Today, he said he wants to keep an eye on how the tech giant presents these account selection options to VR users — therefore, he’s taking a close look at the type of selection architecture (and/or dark patterns) Meta implements — and also said that observes how Meta proposes to combine user data across different services.

This is particularly interesting as the German regulator will be hoping to enforce a formal data separation between Meta’s VR products and its other social services in the near future.

But it appears he has already managed to extract a temporary partial separation according to remarks made today.

The story here is that the FCO has a separate a challenge to the so-called “super-profiling” of Meta usersin which the company aggregates usage data across services and links it to a single user identifier to create increasingly detailed profiles for ad targeting purposes — a privacy-hostile, surveillance-based business model that Germany’s competition regulator considers abusive and looking to block ever since beginning of 2019.

Meta challenged the FCO’s order, which halted enforcement during the appeals process – and is now awaiting a decision from the European Union’s top court, which could land next year, either unblocking the order or rejecting it.

The Bundeskartellamt’s today’s press release notes that the extent to which “such data processing is permissible” is a “topic of live discussion” between it and Meta, including as a result of the aforementioned legal proceedings pending before the European Court of Justice.

“Until this matter is resolved, Meta will, subject to certain exceptions, store the data of users with a separate Meta account that is generated during the use of the Meta Quest headset separately from the data collected by other Meta services,” the FCO added .

Germany’s competition watchdog opened a separate investigation into Meta’s plan to link Facebook accounts to Oculus (as the company and its VR business were known at the time) in December 2020 — states that it is concerned that linking access to its virtual reality products to its social network may constitute a prohibited abuse of a dominant position.

It’s probably no coincidence that Meta’s decision to reverse course and launch separate accounts for its VR users comes a few short months after the FCO concluded another procedure confirming the tech giant is subject to a special regime to control competition abuses, enabled by a 2021 update to German law — meaning Meta faces tougher antitrust scrutiny from the FCO over the next five years. (Meta did not appeal the determination.)

On the VR issue, the FCO wrote that Meta “expresses its interest in an amicable resolution of the Facebook/Oculus issue” — before going on, in late August 2022, to introduce the Meta Account — which it states “allows users to use the Quest 2 and Quest Pro headset without a Facebook or Instagram account”.

“The Bundeskartellamt made clear that in the process of setting up the headset, users should be able to decide as freely and uninfluenced as possible whether to use the headset separately or in conjunction with other Meta services,” the FCO noted, implying that it exercised pressure on Meta to adjust its offerings to remove manipulative inducements.

After appropriate adjustments, especially regarding the user dialogs, the Quest 2 and Quest Pro headsets are also expected to be available in Germany soon,” he adds.

The pan-European Union ex ante competition reform, the Digital Markets Act (DMA), will takes effect across the bloc next year — also placing prior obligations on the most powerful internet giants to “gate-farm”, with Meta being a likely candidate to be designated as an essential platform service operator under the DMA and subject to further restrictions on how it can operate, which are intended to promote competition and fairness. So the operational noose for Meta’s empire continues to tighten in Europe.

Commenting in a statement today, the President of the FCO, Andreas Mund, wrote:

“The digital ecosystem created by Meta with a very large user base makes the company a key player in social media. Meta is also an important player in the growing VR market. Competition in these two sectors could be severely hindered if only Facebook or Instagram members could use the VR headset. Meta responded to our concerns and offered to give users of Quest glasses the option to create a separate Meta account as a solution to the problem. While we welcome this development, we will not end the proceedings today. We will now continue to monitor the actual design of the user options, as well as the issues related to combining and processing user data from the various Meta services. This case shows that section 19a of the German Competition Act (GWB), the new tool for more effective monitoring of large digital companies, allows us to effectively deal with competition issues in practice.”

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