Bundeskartellamt examines linkage between Oculus and the Facebook network

The Bundeskartellamt has today initiated abuse proceedings against Facebook to examine the linkage between Oculus virtual reality products and the social network and Facebook platform.

Andreas Mundt, President of the Bundeskartellamt: “In the future, the use of the new Oculus glasses requires the user to also have a Facebook account. Linking virtual reality products and the group’s social network in this way could constitute a prohibited abuse of dominance by Facebook. With its social network Facebook holds a dominant position in Germany and is also already an important player in the emerging but growing VR (virtual reality) market. We intend to examine whether and to what extent this tying arrangement will affect competition in both areas of activity.”

Facebook has begun to integrate its virtual reality activities into the social network Facebook.com. The Oculus platform, which has previously been operated separately from Facebook.com, will be offered as an additional function on Facebook's social network, under the name “Facebook Reality Labs”. The use of the latest "Quest 2" VR glasses, will require registration using a Facebook.com account. Existing Oculus accounts can no longer be used for registration and the new hardware. Distribution of the new VR glasses outside Germany has already begun.

The aim of virtual reality products is to create a virtual world for the user to experience while using digital content. Three-dimensional vision which allows the human eye to perceive its surroundings in 3D is simulated with special technology. VR glasses are necessary for the use of VR technology. Further hardware is also required, usually a PC, a gaming console or a smartphone. In some VR glasses, including Facebook’s Oculus “Quest 2” glasses, the necessary hardware is already integrated, allowing them to function as “stand alone” devices. Finally, VR software, i.e. digital platforms such as (up to now) the Oculus platform which offer VR content, is necessary to access and use VR content. Currently, VR applications are mainly used in the gaming and video sector. However, their use is not limited to these areas. The number of users and turnover with such applications are constantly increasing.

The (previous) proceeding against Facebook (“Collection and use of data”) – Current situation

In early 2019, in another abuse of dominance proceeding against Facebook, the Bundeskartellamt had already imposed extensive restrictions on the company regarding the processing of user data. Facebook was prohibited from extensively collecting and merging user data from different sources (see press release of 7 February 2019). Facebook had successfully lodged an emergency appeal against the Bundeskartellamts decision with the Düsseldorf Higher Regional Court so that the authority could not enforce its decision against the company. In June 2020, the Federal Court of Justice reversed the decision of the Higher Regional Court and confirmed the Bundeskartellamt’s decision (see press release of Fedaral Court of Justice of 23 June 2020).

However, the hearing in the main proceeding at the Düsseldorf Higher Regional Court is still pending. This was originally due to take place at the end of November 2020 but was recently postponed to 24 March 2021.

Moreover, Facebook lodged another emergency appeal with the Düsseldorf Higher Regional Court last week. In response the Court once again preliminarily ordered the suspensive effect of Facebook’s appeal until a final decision on the emergency appeal is reached. The Higher Regional Court did not grant leave to appeal its preliminary decision on points of law. As a consequence, the Bundeskartellamt has to lodge a complaint with the Federal Court of Justice against the refusal to grant leave to appeal the decision on points of law; the authority filed such a complaint on 2 December 2020. If leave to appeal on points of law were granted, the Bundeskartellamt would immediately lodge an appeal and provide reasons.

Andreas Mundt: “The fact that Facebook has resorted to various legal remedies is not surprising in view of the significance which our proceedings have for the group’s business model. Nevertheless, the resulting delay in proceedings is of course regrettable for competition and consumers.

This is the second time that the Higher Regional Court has preliminarily granted an emergency appeal filed by Facebook. The deadline imposed on Facebook for implementing our demands has again been suspended. As in our view the reasons for this are not sustainable, we have immediately filed a complaint with the Federal Court of Justice. We want the clock to be ticking again for Facebook.”