The Regional Administrative Court of Lazio, with judgment no 26 of December 18th 2019-January 10th 2020, asserts the interesting principle that personal data can be an “asset” which can be economically exploitable and a potential consideration in a contract.
Let’s see how we came to this statement.
In December 2018, the AGCM, the Italian Competition Authority, sanctioned F. Inc. because it violated the articles 20-21-22-24 and 25 of the legislative decree no. 206 of September the 6th 2005 the so-called “Consumer Code”.
The Authority stated that this platform had conducted two different unfair commercial practices to collect, exchange with others and use, for commercial purposes, their customers’ data, including information about their online interests.
The first practice was deemed “unfair” and it consisted of having adopted, in the first phase of registration of the user, “a policy with no immediacy, transparency, thoroughness in regards to the activity of collection and use, for commercial purposes, of users’ data“.
The second practice, qualified instead as “aggressive”, occurred in the employment of a mechanism that, in the reconstruction of the Authority, implied the transmission of users’ data from the social network platform to third-party apps or websites and vice-versa, without the express prior consent of the users, to use them for commercial purposes.
In disagreement with the decision of the Authority, F. Inc. filed an appeal to the Regional Administrative Court of Lazio, who affirmed the illegitimacy of the first practice but considered the second practice without any foundation.
The first practice concerned the slogan “Sign up. It’s free and always will be”. The Authority considered that this slogan didn’t find a clear and evident link to the collection of users’ data and their use for commercial purposes. The Administrative Judge, in this instance, agreed with the Authority and recognized that the slogan “it was untruthful and misleading, as the collection of the users’ data for a remunerative purpose was a consideration of the social network services“.
To avoid running into a deceptive practice, F. Inc should have informed the users/customers that the information obtained from the data (for example preferences) would have been used for commercial purposes that went beyond the simple use of the social network.
What appears to be even more interesting and what leads to the acknowledgment of the economic value of personal data, is the motivation given by Regional Administrative Court about the exception of incompetence brought up by F. Inc.
The company in its defense affirmed that it should have been the Authority’s competence because “there wouldn’t be any patrimonial compensation and, for this reason, any economic interest of the consumers to protect“.
In the Administrative Judge’s opinion, this approach based exclusively on the notion of the protection of personal data as a fundamental right of an individual “serve the partial vision of the capacities inherent in the exploitation of personal data, which could be otherwise an available ‘asset’ in a negotiation, liable to economic exploitation and, for this reason, suitable to become a “consideration” of a contract in a technical sense”.
The Regional Administrative Court affirmed that there is another field of protection for personal data, besides the ones already known and regulated by the Reg. EU 2016/679, that sees personal data as a possible object of sale between market operators or between them and the interested subjects.
For this reason, the consumer/user must be informed about the exchange of services at the base of the registration to the social network, as intended in the information obligation regulated by the legislation of consumer protection.
According to the Administrative Judge, the “capitalization” of personal data “requires the operators to respect, in commercial transactions, those obligations of transparency, thoroughness, and non-deception of information required by the legislation for the consumers’ protection, who have to be made aware of the exchange of services underlying the subscription of a contract for the fruition of the service, as the one for the use of a social network”.