Facebook Inc has been unable to untangle itself from a Federal Court case concerning the Cambridge Analytica scandal after a judge dismissed the argument that another company operates Facebook.com for Australian users.
The Australian Information Commissioner is suing both US-based Facebook Inc and Facebook Ireland over the alleged breaching of 311,000 Australian users' privacy.
But the Mark Zuckerberg-led social media giant had argued only the Irish firm should be sued because agreements with users clearly stated Facebook.com was being offered to Australians by Facebook Ireland.
Justice Tom Thawley on Monday dismissed the interlocutory application.
His reasons will be published in coming days after confidential material has been redacted.
Facebook Inc was also ordered to pay the privacy watchdog's legal costs defending the application unless a different agreement was reached.
The AIC had said Facebooks' use of materially identical terms and conditions inferred the US firm was conducting a global business through subsidiaries.
Both entities are accused of disclosing the personal information of Australian Facebook users to third-party app This Is Your Digital Life between March 2014 and May 2015.
Cambridge Analytica later used data collected by the app for political profiling purposes.
Cambridge Analytica rose to global prominence in 2018 when it was linked to a breach using Facebook user data for political advertising.
Noel Hutley, acting for Facebook, told court hearing in June there was no evidence Facebook Ireland operated on behalf of the US firm.
He said the US firm was sometimes subcontracted by Ireland including to provide cookies served to Australian devices.
But barrister Ruth Higgins SC for the AIC had pointed to the disparity in employee numbers across the two firms and the fact Facebook Australia employees were rewarded from time to time with stock in Facebook Inc.