Hungary for Fines: Facebook fined again; this time for claiming its services are free of charge

December 20, 2019

2 min read

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What's going on here?

The Hungarian competition authority (Gazdasági Versenyhivatal or GVH) has slapped Facebook Inc. with a whopping $4m (£3m) fine for stating its services are free for users.

What does this mean?

Facebook was given the highest ever fine in the history of Eastern Europe for violating consumer rights by misleading users. The GVH stated between 2010 until 23 October 2019, statements that Facebook was “free to join” and is “free and always will be” were displayed on the site’s main page and help centre.

This type of advertising distracted users from noticing the terms on which their data was surrendered to Facebook. As a result, consumers did not know the risk involved, the value of their online activity data, or how Facebook uses personal data for its targeted advertising system to make money. Facebook has therefore been profiting from user data, whilst letting consumers believe its services were free.

The fine imposed does not come as a surprise. Facebook is involved in multiple European Union (EU) privacy investigations on its compliance with General Data Protection Regulation (GDPR). The company also changed its terms and conditions this year, after the European Commission (EC) demanded it become more transparent on how it uses personal data to earn revenue.

What's the big picture effect?

BigTech companies like Facebook, Amazon and Google are in the crosshairs of U.S. and European regulators (see our article on that here). The size and power of these companies mean they exploit “network effects”, where their size makes users more attracted to the products and services they provide.

It explains why technology companies have been dominating markets such as mobile apps, e-commerce, digital advertising and internet searches, making them the most valuable companies in the world. Their power is also why several breaches of data and anti-trust regulations have taken place, springing American and European regulators into taking action via fines and investigations.

Even more extreme action is being envisioned, such as U.S. Senator Elizabeth Warren’s call for the break up of mergers like Facebook’s acquisition of Instagram and WhatsApp (see our article on that here), while in the UK, a panel appointed by the British government hopes for a new regulator that could force tech companies to share data on customers with smaller competitors.

Change in the practices of BigTech companies is slow, but with regulators keeping a watchful eye, user data and rights are safer than they otherwise would be.

Report written by Evania D’souza

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