On July 29, 2019, the Court of Justice of the European Union (“CJEU”) issued its judgment in Case C-40/17 (Fashion ID GmbH & Co. KG v Verbraucherzentrale NRW eV). This is a landmark decision regarding the assessment of who has the responsibility for complying with data protection legislation in the context of embedding third-party features that regularly takes place on websites.

The CJEU adopted a broad view of the situations in which a “joint controllership” can arise. It held that, under EU data protection legislation, the operator of a website featuring the Facebook ‘Like’ button (a social plugin that causes the transmission to Facebook of website users’ personal data) can qualify as a controller, jointly with Facebook. Consequently, the website operator is directly responsible for complying with legal obligations in this respect, including by informing its users that their personal data will be transferred to Facebook.

However, the CJEU importantly clarified that the website operator’s role as controller (and the corresponding legal obligations) is limited to the collection and transmission of the data to Facebook and does not include any subsequent personal data processing that Facebook carries out.

The CJEU’s findings will potentially affect third-party technologies other than the Facebook ‘Like’ button, which are often incorporated into websites, such as cookies and pixels.

1. The Facts

Fashion ID is an online retailer whose website featured the Facebook ‘Like’ button, which allowed visitors of the website who are Facebook users to “like” articles and post them on Facebook’s social network.

The existence of this plugin entails that, every time a visitor consults the website, his or her personal data (namely, information concerning his or her IP address and browser string) is transmitted to Facebook, which also places different kinds of cookies on the visitor’s device. Notably, this data processing occurs regardless of whether the visitor is a member of the social network or has clicked on the ‘Like’ button.

Verbraucherzentrale NRW, a German consumer protection association, brought a lawsuit against Fashion ID on the ground that the use of that plugin results in a breach of data protection legislation. Verbraucherzentrale NRW claimed that transmission to Facebook of visitors’ personal data occurred without the data subjects’ consent and in breach of the duties to inform set out in legislation on the protection of personal data.

The Düsseldorf Higher Regional Court requested a preliminary ruling of the CJEU, seeking the interpretation of EU data protection legislation. In light of the date of the facts in the dispute in the main proceedings, Directive 95/46/EC applies, albeit having been repealed and replaced by Regulation (EU) 2016/679 (“GDPR”) as of May 25, 2018.

The core question among those posed by the referring court was whether Fashion ID must be classified as a controller with regard to the data processing taking place, and if so, how the individual obligations imposed by EU data protection legislation are to be met in such a scenario.

2. The Findings of the CJEU

The CJEU noted that, under EU data protection legislation, a natural or legal person is a controller only in respect of operations involving the processing of personal data for which it determines the purposes and means. By contrast, that natural or legal person cannot be a controller in the context of operations that precede or are subsequent in the overall chain of processing and for which that person does not determine either the purposes or the means.

In light of the above, the CJEU found the following:

i. By embedding on its website the Facebook ‘Like’ button, Fashion ID made it possible for Facebook to obtain personal data of visitors to its website and was capable of determining, jointly with Facebook, the purposes and means of this data processing. Therefore, Fashion ID is to be regarded as a controller, jointly with Facebook, with respect to the activity consisting of this collection of personal data and disclosure to Facebook.

ii. By contrast, the CJEU found that Fashion ID cannot be a controller in respect of subsequent operations that Facebook may carry out after having received the personal data. In the CJEU’s view, it seems impossible that Fashion ID determined the purposes and means of these additional data processing activities.

The role as controller assigned to the website operator entails that this operator is responsible for compliance with the duties typically resting on controllers, particularly (a) the duty to inform data subjects about the processing and (b) the obligations concerning the legal basis of the processing.

Therefore, the website operator must inform data subjects of the data processing and must collect the data subjects’ consent in this regard when needed (particularly if the data processing entails access from the website operator to information stored in the data subjects’ terminal equipment through the use of cookies and similar technologies).

However, this responsibility is limited to the processing activity consisting of collection and disclosure by transmission to Facebook of the visitors’ personal data. Thus:

i. The website operator is not responsible for the information with which the data subjects must be provided in relation to the subsequent processing of personal data by Facebook; and
ii. It is not the website operator’s responsibility to collect data subjects’ consent for the additional processing that Facebook conducts.

3. Key Takeaways

a. The Ruling of the CJEU and the GDPR

As noted above, the CJEU applied provisions of Directive 95/46/EC, which has been replaced by the GDPR as of May 25, 2018.

However, the reasoning and the findings of the CJEU will also apply in the framework of the GDPR going forward as the relevant GDPR’s legal concepts and principles are analogous to those in Directive 95/46/EC.

Additionally, the obligations on controllers (and processors) have been expanded under the GDPR compared to Directive 95/46/EC. For instance, Article 26 of the GDPR now expressly stipulates that a website operator and a provider of a plugin who act as joint controllers would have to enter into an “arrangement” (the “essence” of which must be made accessible to data subjects) and, irrespective of the terms of this “arrangement,” data subjects may exercise their rights in respect of and against each of the joint controllers.

b. The Notion of Joint Controllership

The CJEU adopted a wide concept of joint controllership. It found that joint controllership can exist for specific phases of the data processing (in the case at issue, the initial collection of the data and its transmission to Facebook) and that controllership can be attributed to only on one of the parties in subsequent phases.

The CJEU also held that, as long as the website operator has a role in determining the purposes and means of the processing, a website operator may be a controller even if it does not itself have access to the personal data collected and transmitted to the other party. This is consistent with the CJEU’s prior decisions holding that joint responsibility of several actors for the same data processing does not require each of them to have access to the personal data concerned. Indeed, in 2010, the Article 29 Working Party had already stated that “having access to data is not an essential condition to be a controller.”

c. The Website Operator’s Information Duty 

Based on the CJEU’s findings, website operators have informational duties in relation to the functioning of the social plugin that concern collection and communication of personal data to the provider of the plugin. As a consequence, website privacy notices that do not already include proper information on this will have to be updated.

As far as third-party cookies or similar technologies are concerned, it is worth noting that information duties of website operators have been identified in the recent Guidance on the use of cookies and similar technologies of the UK Information Commissioner’s Office (“ICO”). According to the ICO, “if you use any third party cookies, you must clearly and specifically name who the third parties are and explain what they will do with the information.”

As the CJEU pointed out in the judgment at issue, information to the data subjects “must be given by the controller immediately, that is to say, when the data are collected.” It should be added that this information must be as user-friendly as possible which, for websites that use cookies or similar technologies, may require particular efforts to explain the activities of these technologies in a way that may be readily understood.

Even though disclosure duties on website operators do not extend to subsequent processing that the provider of the plugin may conduct, it may still be a good practice for website operators to include in their privacy notices links to those issued by the third party.

d. The Website Operator’s Obligations to Obtain Data Subjects’ Consent

The CJEU left it to the referring court to investigate whether the provider of the plugin gains access from the website operator to information stored in the users’ terminal equipment, which would entail the need to also obtain users’ consent pursuant to Article 5(3) of Directive 2002/58/EC. Regardless, the CJEU clarified that the scope of any consent that the website operator needs to request is limited to collection and communication of personal data to the provider of the plugin.

The ICO had previously highlighted that website operators must have an active role of in the collection of consent for the installation of third-party cookies or similar technologies. In the aforementioned Guidance on the use of cookies and similar technologies, the ICO, stated that “if your online service allows or uses third-party cookies you still have to ensure […] that you are allowing [users] to consent to what is stored on their device.” As the ICO admits, “the process of getting consent for third-party cookies is more complex” than in the case of first-party cookies and, “[i]n practice, this can be challenging as not all consent mechanisms presently enable users to disable cookies from third parties directly.” Nevertheless, according to the ICO, “[o]ne of the considerations before incorporating a third-party cookie should […] be whether your consent mechanism allows the user to control whether the cookie is set or not.”

e. Legitimate Interest as a Legal Basis for Data Processing

The CJEU addressed a question of the referring court concerning the “legitimate interest” legal basis.
It should be noted that the referring court did not request guidance concerning whether, in the case at issue, a legitimate interest existed allowing processing of personal data in the absence of the data subjects’ consent. This is, therefore, an issue that the CJEU did not address at all.

Instead, assuming that this legal basis may apply, the referring court merely asked the CJEU to establish whose legitimate interests (i.e., the legitimate interest of the website operator, that of the provider of the plugin or that of both) should be considered in the balancing exercise required by Article 7(f) of Directive 95/46/EC. To this end, the CJEU held that it is necessary that the website operator and the provider each pursue a legitimate interest through the processing operations in order for those operations to be justified in that regard.

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The CJEU limits the responsibility of website operators only to part of the data processing that may take place when social plugins are used.

Still, the obligations listed by the CJEU in this respect may, in several cases, require new and burdensome compliance efforts by website operators. Based on the findings of the CJEU, website operators implementing the Facebook ‘Like’ button have to inform data subjects of the collection of personal data and transmission to Facebook and, where necessary under Directive 2002/58/EC, ask for consent before this data processing takes place.

Furthermore, the elements based on which the CJEU classified the website operator as a controller in the case at issue may be present in other third-party features that are integrated into websites. Therefore, the findings of the CJEU will potentially apply to third-party integrations beyond the specific case of the Facebook ‘Like’ button.

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[1] The plaintiff’s standing to sue was based on the German legislation on unfair competition, which grants qualified entities standing to bring representative suits.

[2] The referring court preliminarily asked the CJEU whether Directive 95/46/EC allows national legislation to grant standing to a consumer association to bring a claim such as the one at issue.  This question, to which the CJEU responded affirmatively, appears to be less relevant than others, considering that Article 80(2) of the GDPR now expressly authorizes Member States to allow consumer-protection associations to bring or defend legal proceedings against a person who is allegedly responsible for an infringement of EU data protection legislation.

[3] In this regard, the CJEU emphasizes that Fashion ID benefited from the use of the plugin since the ‘Like’ button made its products more visible on Facebook.

The CJEU drew these conclusions “subject to the investigations that it is for the referring court to carry out” on the facts of the specific case (paragraphs 75, 79 and 81 of the judgment).

[4] Pursuant to Article 5(3) of Directive 2002/58/EC, when the data processing entails storing information or accessing information stored in the data subjects’ terminal equipment through the use of cookies and similar technologies, the data subjects’ consent is always required.  Regarding this scenario, the CJEU stated that the operator of the website must obtain that consent prior to the collection of the personal data and its disclosure to Facebook.

[5] As the CJEU Advocate General Bobek pointed out in the Opinion he delivered in the case at issue on December 19, 2018, “it is certainly true that the GDPR was not applicable ratione temporis […] in the present case.  However, unless there is a specific or systematic derogation in the new legislation with regard to the relevant definitions, which appears not to be the case as Article 4 of the GDPR largely retains the same key terms as Article 2 of Directive 95/46 (while adding a number of new ones), it would be rather surprising if the interpretation of such key notions […] were to significantly depart (without a very good reason) from the extant case-law.

[6] See, judgments of June 5, 2018, Wirtschaftsakademie Schleswig-Holstein, C-210/16, EU:C:2018:388, paragraph 38, and of July 10, 2018, Jehovan todistajat, C-25/17, EU:C:2018:551, paragraph 69.  In particular, in Jehovan todistajat, the CJEU held that for there to be joint control and joint responsibility, it is not required that each of the controllers must have access to all the personal data concerned.

[7] See Opinion 1/2010 on the concepts of “controller” and “processor”, adopted on February 16, 2010.

[8] The ICO clarified that “when you set cookies you must provide the same kind of information to users and subscribers as you would do when processing their personal data (and, in some cases, your use of cookies will involve the processing of personal data anyway). The information has to cover: the cookies you intend to use; and the purposes for which you intend to use them. These requirements also apply to cookies set by any third parties whose technologies your online service incorporates – this would include cookies, pixels and web beacons, JavaScript and any other means of storing or accessing information on the device including those from other services such as online advertising networks or social media platforms.

[9] See paragraph 104.

[10] In this regard, the ICO’s Guidance on the use of cookies and similar technologies clarifies that “[s]ome sites might use tens or even hundreds of cookies and therefore it may also be helpful to provide a broader explanation of the way cookies operate and the categories of cookies in use. For example, a description of the types of things you use analytics cookies for on the site will be more likely to satisfy the requirements than simply listing all the cookies you use with basic references to their function.

The Article 29 Working Party, in its Guidelines on transparency under Regulation 2016/679, as last revised and adopted on April 11, 2018, recommended the use of layered privacy statements in the digital context “in light of the volume of information which is required to be provided to the data subject.” and clarified that the first layer of a privacy statement “[…] should also contain information on the processing which has the most impact on the data subject and processing which could surprise them. Therefore, the data subject should be able to understand from information contained in the first layer/ modality what the consequences of the processing in question will be for the data subject.

[11] The CJEU addressed this question in light of the possibility that the data transmitted to Facebook may be other than information stored in the users’ terminal equipment (for which consent would be required under Directive 2002/58/EC and, therefore, the legitimate interest legal basis could not apply).