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Facebook announced that it is taking down several apps and closing its Creative Labs division. (Photo : Reuters)

A German watchdog has informed Facebook that it must give users the choice to use pseudonyms instead of their real names when it is "reasonable," as per its national laws. The social network regulator's order resulted from a case in which the tech company blocked a woman's account after she used a fake name.

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Reuters noted that the Hamburg data-protection authority is responsible for governing the social media giant in Germany. The country has 22 million Facebook accounts (May 2014).

Based on the report, Facebook required a valid ID from the woman. It then altered her account username to her legal name.

She had used a pseudonym due to a privacy issue. The German woman wanted to avoid people contacting her about business issues via her own Facebook account.

Facebook used the argument that its European headquarters is in Ireland, and thus under Irish laws, according to ZDNet. The company's real name policy is permitted there. This is due to a 2011 audit that ruled it was justified because it prevented Internet harassment and encouraged child safety.

Johannes Caspar is Hamburg's data protection commissioner. He informed Facebook that the company must abide by German laws and play their "game."

Facebook's Help pages state that the goal of its real name policy is to protect its online community through the use of "authentic identities." Users know with whom they are connecting.

However, German's Telemedia Act states that service providers must allow the use of pseudonyms in certain situations. That is when it is "reasonable."

Facebook's real name policy has changed over the years. In 2014 the social networking company promised to make changes after a user reported hundreds of fake accounts of drag queens or kings, which triggered protests from the lesbian, gay, bisexual, and transgender (LGBT) community, according to Engadget. However, it has stated that the spirit of the policy has been for all users to use their real-life names.