The UK Competition Appeal Tribunal (CAT) recently handed down a judgment refusing to allow “the Facebook Claim”—among the more well-known UK competition-law class-action cases—to proceed to trial. While the case failed to receive the necessary certification, it may yet fight another day, provided that it undergoes, as the CAT put it, a “root and branch re-evaluation.”
To conduct such a review, it may be necessary to go beyond the usual technical considerations and examine the case’s intellectual foundations, as its failings can be found in its adoption of ideas from Shoshana Zuboff’s notion of “surveillance capitalism” and, indirectly, from Karl Marx’s theory of the surplus value of labor. Ultimately, it was these foundations that put the case at odds with the principles of UK competition law.
What Was the Facebook Claim?
The Facebook Claim alleged that Facebook had breached competition law from 2016 to 2019, affecting 45 million UK Facebook users, by imposing an “unfair data requirement.”The allegation was that the company collected disproportionately more user information than was actually needed to operate Facebook. For example, while collecting information to run contextual ads on Facebook itself may be proportionate, collecting information from third-party websites was not required to run the site and was therefore argued to be disproportionate and a breach of competition law through an abuse of a dominant position.
The plaintiffs further argued that, had Facebook users been aware of the valuable data with which they were parting and were they not bound by unfair and misleading terms and conditions, the company would have been forced to compensate those users for taking and using their data. It was this compensation—calculated to be “a minimum of £2.2 billion”—that the claim demanded on behalf of the class.
The Facebook Claim’s Intellectual Foundation
The Facebook Claim’s shortcomings can be traced back to its reliance on arguments made by Harvard Business School social psychologist Shoshana Zuboff in her 2019 book “The Age of Surveillance Capitalism.”
In Zuboff’s account, internet companies such as Google and Facebook—traumatized by the legacy of the dot-com bubble and the need to generate revenue—adopted a “behavioral surplus model” that prompted these firms to amass more and more user information. This was done not to improve the user experience, but to predict user behavior and subtly influence it for maximum commercial gain. This ability to nudge users to buy products was then sold to advertisers at a hefty profit. The idea has clear parallels with the Facebook Claim, with the “surplus” in Zuboff’s model likewise referring to the difference between the information actually needed to operate Facebook and the information collected to maximize returns.
The claim also mirrored other aspects of Zuboff’s work. Notably, the CAT criticized the case for failing to recognize social media as a two-sided market, thereby ignoring the role and interests of advertisers. This omission was unsurprising, given that Zuboff herself is skeptical of framing the market as two-sided. In her argument, advertisers’ interests and incentives are aligned with the surveillance capitalists against the user, and therefore do not need to be analyzed separately. Furthermore,understanding how Zuboff grounded her “behavioral surplus” model on the key Marxian concept of the surplus value of labor sheds further light on the Facebook Claim’s incompatibility with the principles of UK competition law.
Marx’s theory is founded on two principles. First, all value is created by workers. For example, it is a worker who turns a piece of wood into a chair using the appropriate tools. It is not the chisel that makes the chair; rather, it is the worker’s toil that creates something new and hence creates value. Second, workers can only work using tools and capital. But these tools, which Marx famously called the “means of production,” are owned and controlled by the capitalist. This means the worker has no choice but to work for the capitalist in return for a wage.
Marx, however, argued that wages would never equate to the value the workers created. Instead, capitalists would keep a portion of this value as profit. This difference between the value the worker has created and the wage they receive is what Marx christened the “labor surplus,” as, in effect (with parallels to both Zuboff and the Facebook Claim) the worker has given some of their labor to the capitalists without compensation. This surplus would only grow as workers become increasingly alienated from their work, a trend that becomes more pronounced as workers work on more specialized tasks, such as on an assembly line.
You will note that if you substitute “worker” with “Facebook user”; “labor” with “data”; and “alienation” with “misleading terms and conditions,” Marx’s “Das Kapital” could almost serve as the Facebook Claim’s statement of case. For her part, while Zuboff was clearly inspired by Marx in her language and approach, there are differences in their approaches, let alone their subject matter. Zuboff does not have the all-encompassing ideology and history that Marx developed. Likewise, Zuboff’s conclusion differs from Marx. She does not think surveillance capitalism is an inevitable step in history before the proletarian revolution. Instead, she criticizes ideas of inevitability, which she argues are commonly used by surveillance capitalists to justify their practices.
The Basis for Damages in UK Competition Law
I offer this intellectual history not to demean the Facebook Claim, whose theory of harm holds some parallels to the Bundeskartellamt’s case against Facebook. But it is important to acknowledge these roots, as they ultimately led the Facebook Claim to be argued in a way that contradicts English tort principles for damages. The Facebook Claim argued that users were entitled to damages based on Facebook’s purported excess profits. This claim for Facebook’s excess profit, however, was rejected by the CAT, who cited case law that damages in competition-law cases should compensate a claimant’s loss, rather than remove a defendant’s gain.
English law has recognized certain instances—such as proprietary torts like trespass, breach of fiduciary duty, and “exceptional circumstances” like the infamous Blake v Attorney General case related to stripping the profits from a British-turned-Soviet spy’s autobiography—where compensation for loss may not be sufficient. But in commercial contexts, English courts have traditionally been cautious in confiscating profits, even where contracts have been intentionally breached. Generally, this stems from a desire to safeguard commercial certainty; to ensure that profits continue to serve their role of rewarding time, effort, and skill; and that, in most instances, compensating for loss provides a satisfactory remedy.
Marx’s surplus value of labor theory is compatible with the Facebook Claim’s argument that Facebook’s excess profits should be handed over to its users. According to this framing, Facebook’s profits are not generated by Facebook itself, but by the value created from users’ data—or labor, in Marx’s terms—which Facebook then appropriated. Hence, the claim was not about removing Facebook’s gains, but rather, about users reclaiming what was always rightfully theirs.
But while Facebook should face fines when found to have broken the law and should compensate loss suffered by others, to caricature Facebook as a do-nothing capitalist that creates no value and has done nothing for its profits is both inaccurate and, as shown, unlikely to be successful in court.