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Dr Liza Lovdahl Gormsen is a Director of the Competition Law Forum and Senior Research Fellow at the British Institute of International and Comparative Law. She is also a Senior Advisor to the UK’s Financial Conduct Authority, Board Member of the Open Markets Institute in Washington DC, and Senior Lecturer at the University of Manchester. Here, she tells us why she is leading the class action against Facebook and how supporters can get involved.
I was studying under Richard Whish at King’s College London, who is one of the most prominent professors in competition law. At the time, the European Commission was modernising what’s known legally as abuse of a dominant position so it was the right time to do a PhD on the subject. I became involved in the consultation of the European Commission’s priority guidelines. While doing my PhD, I worked at the Office of Fair Trading – now Competition Markets Authority.
Competition law is a really interesting subject because it has an impact across markets – it’s an area of law that has a huge impact and ripples throughout society. So many consumers are harmed when a dominant company is abusing its position. We’re living in an extremely concentrated economy, with markets that are becoming more and more consolidated as our economy becomes digital. And the pinnacle of the digital economy is data.
Over a number of years, Meta has exploited users’ data through free platforms like Facebook, Instagram and WhatsApp. And there is a complete asymmetry in the way that data has been exploited. What consumers are giving is in excess of what Facebook needs in order for that platform to function, and the value they’re receiving in return is far below the economic value Facebook has been able to create.
It’s not a GDPR issue when you have a company that is dominant in the social network market and it is imposing unfair trading conditions on its users. As a dominant company Facebook has a special responsibility. Facebook has developed a business model that relies on targeted advertising, which requires personal data. I have no problem with the advertisement business model, it’s one that content providers such as the newspapers have used for many years. But Facebook’s business model, which requires a lot of personal data has exploited users to create that value. Facebook does not pay for the data and they’ve never given consumers a choice to use the platform but keep their data through a subscription model, for example.
These terms and conditions are opaque. We ran an experiment and it took us a full week to read the terms and conditions and the links to the links in the terms and conditions. But that’s partly why we’re focusing on the claim period from 2016 to 2022, because in 2020 Facebook changed its terms and conditions. Prior to that, they have without a doubt abused their dominant position. And they now need to compensate consumers for that exploitation.
They don’t have any other choice. You have consumers who will say ‘ok, I understand that the data I leave on Facebook, Instagram and WhatsApp is being used, and I’m fine with that’. But that’s not where it stops. That’s first-party data. Facebook also collects data from other website you visit, which is known as third-party data. Facebook combines those two data sets and creates super profiles on consumers, which have enabled them to generate excessive profits. If this was a competitive market, and consumers could have gone elsewhere, or Facebook would be forced to offer a choice of using personal data or pay a subscription to use the platform.
A class action is a really wonderful instrument. It would be incredibly difficult as an individual litigate against Facebook. It is so expensive to litigate, it is time consuming, and difficult. That means that everyday consumers are denied justice because they have very little chance of taking big corporations to court. What a class action does is simply to group consumers that have been harmed by the behaviour of a company. In this way the court hears one case, rather than lots of identical cases. I am representing the class and holding Facebook accountable on the group’s behalf.
I am here to help consumers that are being exploited.I am looking for proportionality and accountability. I hope I can give consumers some awareness about what’s going on and help them receive some compensation for their data.
I don’t have the power to impose structural or behavioural remedies, such as breaking Facebook up or asking it to behave in a different way; only a regulator like the Competition Markets Authority (CMA) has those powers. However, I hope to be able to recompense consumers for the abuse they have suffered and given them an awareness about the value of the data.
If we’re unsuccessful, my greatest fear is that Facebook’s exploitation will continue unchecked. I don’t mind ‘bigness’ of corporations as that can sometimes lead great efficiencies for consumers, but the bigger a company is in the market, the less choice we have. We want to create choice in the market so that if people are unhappy, they can go elsewhere. Facebook has shown that it’s incapable of not exploiting its size. What I would like to see are markets that aren’t so concentrated.
Engaging with this issue and the wider debate. If I can create a level of understanding and people start thinking about what is happening, I will be happy.
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