Gormsen v Meta in the CAT: is Big Tech’s collection of personal data unfair?
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A vast amount of personal data is amassed every day by ‘Big Tech’ companies such as Facebook, Amazon, Apple and Google. This information is then used by these companies to enhance other services, for instance advertising.
These Big Tech companies hold dominant market positions, which has led to scrutiny by competition regulators around the world – a number of Big Tech companies have received fines for established breaches of competition law, and several other investigations are ongoing. Despite these known breaches, consumers and businesses face challenges when seeking to bring collective data claims against Big Tech.
The initial challenge
Attempts to raise collective data claims seeking to recover “losses” have been largely unsuccessful in the UK. Lloyd v Google [2021] UKSC 50 is a prime example. However, in February 2022 Dr Liza Lodahl Gormsen (a competition law expert) commenced an innovative new challenge in the Competition Appeal Tribunal (CAT) against Meta, the owner of Facebook and Instagram.
Dr Gormsen stated that Meta “are exploiting users by taking their personal data without properly compensating them for that data”. She went on to allege that Meta breached competition law by abusing its dominant position in the market, primarily by exploiting user data for advertising, which reportedly accounts for 98% of its income.
Meta denied the claims, responding that “[people] choose to use our services because we deliver value for them and they have meaningful control of what information they share on Meta’s platform and who with”.
An unfair use of data?
Dr Gormsen applied to the CAT, as a proposed class representative in terms of s47B of the Competition Act 1998, for a collective proceedings order (CPO) for permission to bring opt out collective proceedings on behalf of an estimated 45 million Facebook users in the UK. She alleged that Meta breached Article 102 of the Treaty on the Functioning of the European Union and the domestic Chapter II Prohibition by abusing its dominant position. The application specified three alleged abuses:
- access to Facebook was conditional on users accepting terms and conditions that provided Meta with access to the user’s personal data (the Unfair Data Requirement);
- this was an unfairly high “price” for the provision of social networking services (the Unfair Price); and
- Meta imposed other trading conditions that were unfair and anti-competitive (the Unfair Trading Conditions).
According to the application, Meta “unfairly required users to hand over their personal data as a condition of access to [Facebook]”, while failing to “share with its users the profits it makes from such data”.
Round one – CPO judgement in favour of Meta
The CAT issued its CPO judgement in February 2023 which did not grant Dr Gormsen’s application. The Tribunal identified issues with the “vague” case put forth by Gormsen, the nature of the harm allegedly caused by the alleged abuses, and the accompanying expert methodology.
In terms of the Pro-Sys test, prior to granting certification, the CAT stated that it must be satisfied “as to the steps that need to be undertaken in the future so as to ensure that the claim […] can be heard in an efficient manner, consistent with the Tribunal’s governing principles”.
It also stressed that, while the CAT should not engage in a merits assessment at certification stage unless the claim warrants striking out, it still bears a “heavy responsibility as the gatekeeper in collective proceedings”, primarily to “ensure that there is in place a blueprint for the parties and for the Tribunal of the way ahead to trial”.
The Tribunal also considered the three alleged abuses presented by Dr Gormsen’s CPO. Regarding both the alleged Unfair Data Requirement and Unfair Trading Conditions abuses, it held that: “there can be no doubt that the Pro-Sys test has not even been addressed – let alone any kind of ‘blueprint’ to trial provided”. As such, the CAT agreed with Meta’s arguments that no expert methodology “at all” had been framed by Dr Gormsen for these elements.
When analysing the alleged Unfair Price abuse, the CAT noted difficulties with the pleaded case and the accompanying methodology. It identified “significant methodological difficulties” in the claim’s approach and stated that “far more is required than a mere clarification”.
For example, the methodology that was adopted assumed, rather than demonstrated, that the price Meta charged was excessive and an abuse of its dominant market position. The CAT asserted that the expert needed to calculate the price users would pay if the alleged abuse (i.e. the requirement to provide personal data in exchange for access to Facebook) was removed. It must then provide a mechanism to correlate and quantify the loss to class members. The CAT did, however, acknowledge the difficulties in articulating a methodology linking Meta’s (alleged) excessive profits to the class’s (alleged) loss. “Without significantly more articulation,” the CAT concluded, “there is no blueprint to trial, and … [Dr Gormsen] has unequivocally failed the Pro-Sys test”.
Round two – the opportunity to try again
Despite Meta’s request to put Dr Gormsen’s application “out of its misery”, the CAT stated its “preference – consistent with the importance of access to justice articulated by the Supreme Court in Merricks – is that the Proposed Class Representative have another go.” It went on to expand: “But we wish there to be no misunderstanding … The methodology so far advanced by the PCR will need a root-and-branch re-evaluation, and mere tinkering with the methodology will not do”.
The Tribunal stayed the application for six months, inviting Dr Gormsen to “file additional evidence setting out a new and better blueprint leading to an effective trial of these proceedings”.
The undertaking ahead for Dr Gormsen is a daunting one as the challenge of framing and quantifying Big Tech’s data exploitation is not easy to navigate. It is promising, however, that the CAT has given Dr Gormsen a second chance, together with detailed guidance on the claim’s deficiencies.
Broader impact of the case
This case demonstrates the CAT’s willingness to support proposed class representatives in progressing innovative claims and improve access to justice. The CAT stressed the importance of its gatekeeper role with regards to certification and the need for proposed class representatives to provide an effective blueprint to trial. Practitioners would, however, benefit from further elaboration on the exact requirements for such a blueprint – perhaps more elaboration will be forthcoming in round two.
Reworked from the original article published in Competition Magazine.
