Facebook has suffered another potential blow to its ability to make money after a German regulator ordered it to stop processing WhatsApp data on its citizens.
The Hamburg Commissioner for Data Protection and Freedom of Information, or HmbBfDI, announced on Tuesday that it has issued an injunction to prevent Facebook from processing personal data from WhatsApp.
The move will further restrict Facebook’s options as it seeks to monetise WhatsApp.
Facebook is already a vocal opponent of Apple’s decision with iOS 14.5 to force mobile apps to ask users for permission to gather tracking data for advertising purposes. Facebook makes most of its revenue from advertising.
The injunction by the German regulator on Facebook processing WhatsApp data is not the first time that the social network has been in trouble with German officials.
In September 2016 the Hamburg Commissioner for Data Protection and Freedom of Information ordered Facebook to halt the collection and storage of data belonging to 35 million WhatsApp users in Germany.
The German watchdog at the time accused Facebook of “misleading” WhatsApp users and breaking German law, when the social network agreed when it purchased WhatsApp in 2014, that data would not be shared between them (Facebook and WhatsApp).
Under German law, a company that provides the data (in this case WhatsApp) and the receiving company (Facebook) have to establish a legal agreement to do so.
In 2016, according to the Hamburg regulator Facebook had not obtained an effective approval from WhatsApp users, and it didn’t have the legal basis to hold onto the data, hence the injunction.
Now five years later and once again HmbBfDI has issued an injunction to prevent Facebook from processing personal data from WhatsApp.
WhatsApp now has 60 million users in Germany.
Facebook said it is considering how to appeal the order.
But why has Facebook once again incurred the wrath of German authorities this time around?
WhatsApp users are being told to agree to the new terms by 15 May if they want to continue using the app, which now competes with rivals like Signal and Telegram.
This caused a lot of concern, but what the messaging app had failed to properly explain was that the terms update was largely aimed at giving users new options for interacting with businesses and providing more clarity about how it collects and uses data.
Yet Johannes Caspar, who leads the HmbBfDI, says the update isn’t legal.
He has issued a three-month emergency order that prevents Facebook from continuing with WhatsApp data processing in Germany.
Caspar pointed out that the Cambridge Analytica scandal and the data leak that affected more than 500 million Facebook users “show the scale and dangers posed by mass profiling,” and said that profiles can be used to manipulate democratic decisions.
Caspar also urged a panel of European Union data regulators to follow suit, so the ban applies to all 27 EU members states.
A WhatsApp spokesperson told CNBC that the Hamburg Data Protection Authority’s order against Facebook is “based on a fundamental misunderstanding of the purpose and effect of WhatsApp’s update and therefore has no legitimate basis.”
“Our recent update explains the options people have to message a business on WhatsApp and provides further transparency about how we collect and use data,” the WhatsApp spokesman added.
“As the Hamburg DPA’s claims are wrong, the order will not impact the continued roll-out of the update,” the spokesman said. “We remain fully committed to delivering secure and private communications for everyone.”