It will appeal against the decision, saying that the regulator "misapplies German competition law to set different rules that apply to only one company".
According to the tech giant, the Federal Cartel Office has misunderstood Facebook's compliance with the EU's General Data Protection Regulation (GDPR) privacy law, which went into effect a year ago. The FCO concluded, however, that Facebook's data collection through non-Facebook services violated the GDPR: Facebook had no effective justification to gather data from its subsidiaries, WhatsApp and Instagram, or other external services, nor did it obtain effective, voluntary consent from its users.
A German court has ruled that Facebook will need to cut down on collecting user data across different platforms unless customers have given explicit consent.
Such "third-party" sources include Whatsapp and Instagram's chat features, as well as internet sites and mobile apps that collect data about users' activities.
Privacy International's head of advocacy and policy, Tomaso Falchetta, said: "Privacy harms are directly caused by the business models of companies in dominant positions, which can impose excessive collection of data on people who have become "captive users".
And the FCO specified that an "obligatory tick on the box" by which a user would agree to all the company's terms was not sufficient basis for "such intensive data processing".More news: Five children charged with murder in shooting death of Nashville musician
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But the EU's data protection supervisor Giovanni Buttarelli said in a blog post that "we have consistently supported competition authorities taking action to combat abuse of dominance".
Facebook said German authorities underestimated the competition Facebook has in Germany from YouTube, Snapchat, Twitter and others. "The Tyee is now reporting that Facebook has told them that RBC had the capacity to read, write and delete private messages of Facebook users who were using the banking app".
"With 23 million daily active users [in Germany] and 32 million monthly active users Facebook has a market share of more than 95 per cent (daily active users) and more than 80 per cent (monthly active users)".
Germany has declared illegal Facebook's practice of demanding user information in exchange for the right to use its services.
If Facebook fails to comply it could be faced with fines of up to 10% of the company's annual global revenues, which grew to $55.8 billion past year.
The spokesperson added that the ruling by the FCO also misinterprets its compliance with GDPR and "threatens the mechanism European law provides for ensuring consistent data protection standards across the EU".
The ruling will apply not just on Facebook, but across WhatsApp and Instagram - both of which are owned by the company, and will soon be integrated by Facebook to share messaging services. Since then Facebook has faced countless questions about its privacy practices from governments around the world. However, assigning the data to Facebook user accounts will only be possible subject to the users' voluntary consent. Most recently, Facebook was caught putting spyware on the phones of teenagers for "research" purposes.