Meta’s Fundamental Digital Rights Blunder - And a German Antitrust Fix

In early July 2023, the European Union's Court of Justice (CJEU) issued a landmark antitrust ruling on a German case concerning Meta's abuse of dominant position. Fast-forward to exactly one year later, and another German case involving Meta’s dominance may further benefit competition efforts in Europe. However, beyond the specific elements of the German Court's decision that would intrigue traditional antitrust audiences, the broader and potentially more significant implication is that this ruling represents a substantial victory for protecting our fundamental rights on the internet.

Meta’s Overzealous Moderation Leads to a Beneficial Legal Decision

Let's begin with a quick overview of the case. It unfolded like many content moderation incidents, especially in the creative industry. Filmwerkstatt Düsseldorf, a non-profit organization that hosts movie screenings - akin to a movie theatre - but also film workshops and similar events, used Facebook to spread the word about its program and events - until one day, its own Facebook page became inaccessible. Facebook provided no proper information about what might have caused the removal - the only explanation provided was an email citing a violation of community guidelines without any specific details.

Nevertheless, the Filmwerkstatt had a suspicion. Just before the removal, they had posted an image to advertise the screening of the Oscar-nominated film Embrace of the Serpent. The image depicted indigenous people wearing traditional clothing akin to loincloths. Although the photo contained no sexual content, it seems likely that Facebook’s algorithm removed it as potential nudity. This overzealous content removal is a well-known issue in the creative community - even photos of the statue of David had been removed in the past.

While this seems to be a straightforward error caused by the fallibility of technology – one that human oversight could rectify – this is, unfortunately, where often the story ends. Attempts to contact Meta rarely yield any results. Whether the new rules under the Digital Services Act (DSA) will bring about meaningful change in this area remains to be seen. Filmwerkstatt Düsseldorf however challenged Facebook’s decision before German courts, supported by the NGO Gesellschaft für Freiheitsrechte (Society for Civil Rights, GFF) and the law firm Hausfeld. According to the jurisprudence of German courts, Facebook was required to explain any content moderation decisions to the users involved. This obligation was clearly breached in the company’s conduct towards Filmwerkstatt Düsseldorf. However, it was unclear whether German courts had the authority to hear the case.

This jurisdictional hurdle could potentially be overcome by arguing that Meta had not only breached the contract but also abused its dominant market position, thereby violating competition law. And this strategic choice turned out to be efficacious: The District Court (Landgericht) Dusseldorf sided with the Filmwerkstatt, declaring Meta’s behavior an abuse of its dominant position. The court thus opened a new door for private competition law enforcement to protect and promote freedom of speech and other fundamental rights.

Standing on the Shoulders of the Bundeskartellamt

Moving on to a brief analysis of the key aspects of the decision, the first point worth noting is that the German court readily built upon the precedent established by the German competition authority, the Bundeskartellamt. When the German national authority initially took on what was then still known as Facebook in 2019, it did so based on a theory of harm considered quite unconventional at the time. Notably, it was this German proceeding that not only led to the CJEU's judgment but also produced a detailed legal and economic framing of the relevant market and Meta's dominant position.

The Dusseldorf Court extensively drew upon these comprehensive assessments from the Bundeskartellamt's findings in its decision to which, according to the Court, Meta has not provided sufficient counterarguments. According to this, Facebook is a social network (a submarket of social media) with a multi-sided character, with users on one side and those trying to reach out to users on the other. The Filmwerkstatt belongs to the latter category, its own content aimed at reaching users and promoting its business activities. In this demand market, Meta holds a dominant position. This aspect of the ruling merits emphasis, particularly because the definition of the relevant market and the determination of dominance in the digital era are often where many cases of abuse of dominant position stall or where they linger for several years.

Protecting Fundamental Rights: Antitrust as Part of the Solution

Equally significant, especially from the perspective of protecting fundamental rights on the Internet, is the issue of jurisdiction. Qualifying the case as an abuse of a dominant position has enabled the case to navigate around potential jurisdictional roadblocks. While consumers are free to sue before their local courts, it is often unclear who can be qualified as a consumer on a platform, as many people also share posts related to their work or business. Moreover, small non-profits like Filmwerkstatt are never considered consumers despite having no more bargaining power against Meta than anyone else. Bringing the case as a “normal” contract dispute would likely have resulted in Irish courts having jurisdiction.

However, competition law generally grants jurisdiction to the place of injury - in this case, Dusseldorf, Germany. This also made it possible to disregard the choice of court clause in Meta’s terms of service. According to that clause, claims relating to community standards or the use of the Meta Products would have to be brought in Ireland. While prima facie, such a wide clause would also cover competition law issues, the court found that the interests of the parties demanded a more narrow reading. When entering the contract, Filmwerkstatt could not envision that Meta would act contrary to competition (or tort) law and, therefore, would not have to assume that the clause would exclude such claims without a clear mention or at least indications in this manner.

Turning now to the legal framing of Meta's behavior as an abuse of dominant position, the Dusseldorf Court found that it consisted of the blocking carried out by the defendant without prior explanation or a hearing immediately following the block. The court rightly did not hesitate because the plaintiff was a non-profit organization, as it still competes with other film and cultural institutions in terms of its offerings, particularly its events. Other parts of the decision that are important include the assertion that both the already mentioned DSA and the Platform to Business Regulation, which form part of the now burgeoning body of European legislation for the digital sphere, recently joined by the AI Act, can be considered in the application of (German) antitrust law as they pertain to market-related regulations.

The mere fact that these legal instruments were expressly referred to can be seen as evidence that the court views the enforcement of competition law as part of a large, coherent framework addressing the (market) power held by Big Tech. Likewise, the court referenced fundamental rights. While not every violation of fundamental rights might be addressed through competition law, the court’s decision may reflect a more progressive understanding of competition law, away from a narrow focus on efficient markets and towards encompassing other values such as fundamental rights or sustainability.

In sum, the court’s decision might not just be a happy accident of jurisdictional strategy but a building block—following the 2019 Bundeskartellamt decision—towards a more effective and fundamental rights-friendly understanding and enforcement of competition law in the EU.

Finally, the court’s approach might even have repercussions outside the EU: while strong tech regulation is (thus far) still lacking in many parts of the world, competition laws can be found virtually all around the globe. Thus, courts from those jurisdictions might draw upon the German ruling in order to tackle arbitrary content moderation practices, even without a DSA-like instrument that could address them.