German officials have said Facebook’s new facial recognition software is illegal and want its use halted. The German government said the features Facebook uses violate European and German data protection law and all the related data derived from its use should be deleted. They have further threatened Facebook with legal action if some measures are not taken soon.

Current Facebook facial recognition software allows users to upload pictures of their friends and have them identified without the need of tag feature. It does so by evaluating the faces and saving them them in the database; once tagged a few times, the database recognizes the face again and applies the tag to the new upload. Concerns have been raised on this tool as such Facebook is saving sensitive biometric data.

For new users this tool is enabled by default; however users can opt-out to disable it via privacy settings.

Johannes Caspar, Hamburg’s data protection official, said, “the feature was a serious violation of people’s rights to determine what is done with their personal data. German authorities would take quick legal action if Facebook did not comply with his demands.”

Casper further added if Facebook does not follow the German data protection law, it could face fines up to €300,000 ($430,000). “The software offered potential for ‘considerable abuse’ and was illegal.”

Facebook, last year, began to implement a method for facial recognition with images called Tag Suggestions. Using this feature, one can group similar faces together and automatically recommend the friend they should tag them with. Facebook photos are one of the most widespread features of this social networking site. Later Facebook was criticized over security and privacy concerns regarding the usage of this tool.

Facebook is not the only social networking player that uses facial recognition software. Google has recently acquired PittPatt, or Pittsburgh Pattern Recognition, a facial recognition software company. Google plans to use the technology in Google Apps, including Google+ and YouTube, as well as Images and on mobiles.

Apple is also in process of integrating facial recognition feature on the next iOS 5 versions. Last year Apple acquired Polar Rose, a company that specializes in facial recognition.

Another startup company Face.com raised fund of $4.3 million, from investors led by Rhodium, Yandex, the operator of Russia’s largest search engine, and some private investors to add new features to their facial recognition platform. Face.com’s technology Phototagger and Photo Finder is used by extensively by Facebook.

Cloud-based industries are now using social media and facial recognition software to allow your smartphones to recognize people. Viewdle mobile apps automatically recognize people for you and attempts to smart-tag photos before they uploaded them to sites like Facebook by scanning the images.

This is not the first time Facebook has faced privacy problems in Germany. In January, Facebook was asked by a data protection agency to limit the use of e-mail addresses of people who are not using its site. Germany is a country well-known for its extremely strict privacy laws. Last year when Google launched Street View in Germany’s top 20 cities, it faced prosecution from German authorities. Google had asked households to opt-out of having their houses photographed for Street View.