TECH

UK Tribunal Approves $2.7 Billion Collective Antitrust Lawsuit Against Facebook

As Meta confronts antitrust regulators in both the U.S. and Europe, a class action-style competition lawsuit in the U.K., amounting to over £2.1 billion, is advancing after the social media behemoth’s unsuccessful attempt to dismiss the case. The lawsuit is aiming for damages totaling at least approximately $2.7 billion based on current exchange rates.

Dr. Liza Lovdahl Gormsen, an expert in competition law, is taking legal action against the parent company of Facebook, Instagram, and WhatsApp. She alleges that Meta has exploited the personal data of U.K. users in an “unfair bargain,” arguing that users had no real choice but to allow Meta to collect and process their data for advertising profits due to its dominant position in the social networking market.

“The Class Representative contends that these practices create an unfair trading condition and/or impose an excessively high cost on users,” the plaintiffs state in a legal notice related to the collective claim.

The case, initiated by Gormsen as a representative action for all U.K. Facebook users, spans 46 million Meta service users in the country from February 14, 2016, to October 6, 2023.

This “opt out” collective action has been nearly three years in progress. Gormsen first filed the suit in January 2022, and Meta has attempted and failed twice to have it dismissed since.

A revised claim, filed in October 2023, updated the sought damages to between £2.1 billion and £3.1 billion (excluding interest), supported by evidence from Professor Fiona Scott Morton. Originally, the damages were set at £2.3 billion, but the number of U.K. Meta users has slightly increased compared to the 44 million listed in January 2022.

Recently, the U.K.’s Competition Appeal Tribunal, which oversees antitrust-related litigations, certified the collective claim, allowing it to move forward to trial. This development has prompted an official notice regarding the case, which includes guidance for users on how to opt out if they choose not to participate.

U.K. users of Facebook are automatically included in the collective claim, which means they must actively opt out if they do not wish to be part of any potential damages or financial settlements. (There are no fees or costs associated with inclusion.)

The lawsuit concerns Facebook users and how their data is collected across Meta-owned products beyond Facebook, as well as through third-party platforms. Meta can gather users’ information via cookies, tracking technologies, or data provided by advertisers, data brokers, or other partners to target advertisements.

“Facebook has imposed an unfair bargain on its users regarding the collection of Off-Facebook Data,” the plaintiff states in the official notice. “Facebook mandates that users relinquish Off-Facebook Data to access its platform, presenting a ‘take it or leave it’ proposition.”

Dr. Gormsen asserts that these practices create an “unfair trading condition,” imposing an excessive price on users and their data. The claim suggests that, due to Facebook’s market dominance, users lack viable alternatives to its social networks if they wish to avoid its data collection.

“I don’t believe people can connect with their family and friends in the same manner on Twitter [now X], Snapchat, or other platforms,” Dr. Gormsen told TechCrunch when the case was first initiated in 2022. “Facebook offers a unique experience in that regard.”

The extent of data collection on users has been at the forefront of critical perspectives on social media, including controversies like the 2018 Cambridge Analytica incident and recent inquiries into how apps like TikTok gather user data. This is a central aspect of the lawsuit.

“Consider yourself a Facebook user,” Dr. Gormsen advised TechCrunch in 2022. “You might realize that your data will be utilized by Facebook. However, the tracking pixels also gather extensive information about you when you browse third-party websites that are unrelated to Facebook. This means Facebook accumulates a far larger dataset on you than you were aware of when you signed up.”

Gormsen is represented by Quinn Emanuel, and the case is funded by Innsworth, one of the largest litigation funders globally, which takes a portion of the proceeds if the case is successful.

This litigation is significant for several reasons.

Firstly, the amount being sought by the plaintiffs exceeds some of the largest fines for data violations issued in Europe to date. (For instance, the largest fine Meta has received in Europe for data breaches was $1.3 billion, levied in May 2023.)

Secondly, it establishes a tangible value on personal data, a notion that may be considered contentious.

Third, if the case succeeds, it might set a precedent for how individuals can invoke competition law in their legal actions, and may influence other class-action style antitrust cases—which are proliferating against major tech companies across various sectors, from marketplaces to cloud computing.

“This groundbreaking case aims to redefine the application of competition law in the context of data exploitation,” remarked Kate Vernon, partner and Head of Competition Litigation Practice at Quinn Emanuel, in a statement. “It establishes a legal framework to address this crucial issue, representing a significant shift in our approach to the related challenges.”

We have reached out to Meta for a comment and will provide updates as we learn more.

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