An Italian judge has not only upheld a decision that Facebook stole a partner’s technology but issued a new fine of ten times the original amount.
The Milan appeals court decided for Italian company Business Competence, whose Faround app used data from users’ Facebook profiles to build an interactive map that showed them shops and stores nearby, together with relevant discounts and listed by category.
Faround was released in October 2012 and within just two months, Facebook had launched its version - Nearby Places. Faround was furious and after four years of fighting, the courts agreed that Facebook had stolen its concept and format, changing only its graphic layout. The US mega-corp was ordered to pull its version and publish the ruling both on its websites and in two national newspapers.
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Facebook was fined €350,000 ($430,000, £316,000) for its actions, which amounted to “parasitic appropriation of investments by others,” according to the court in 2019. Naturally, Facebook appealed.
And this week the appeals court not only upheld the decision but boosted the award by more than ten times from €350,000 to €3.8m ($4.7m, £3.4m).
The case could prove important, especially given Facebook’s - and other large tech companies’ - propensity for using their platforms to identify what products and services are popular and then launching their own version to steal the market. Both Facebook and Amazon have been formally accused of this behavior in the US courts and face government-led antitrust actions as a result.
In this case, the court declared that Faround was a database implemented in the form of a computer program and so was protected as a creative work under copyright law. It was the first time that Facebook had been found guilty of reverse engineering an algorithm-driven app in what the Italian court said was an act of unfair competition.
The ruling noted not only that Facebook had failed to provide any concrete evidence that it has developed its Nearby Places app itself. It also said that as a result of the social network having to approve the app because of its integration with Facebook profiles, Facebook gained “privileged and early” access to the beta versions of Faround, stating that it has to test whether the app was compatible with its platform.
While even the new €3.8m fine is a drop in the bucket for a corporation as large as Facebook, the case will serve as just one more example of the company’s abuse of its unique market position and may be used to develop new rules that make that abuse much harder in future, encouraging broader competition.
Spokespeople for Facebook declined to comment. ®