Facebook and Germany have been going back and forth for years, but the most recent development was the disagreement between the two entities as far as using real names or pseudonyms. Facebook wants its users to use their real names, but Germany insisted otherwise. However, Facebook just won the court battle that will force Europeans to use their real names.
After a German court initially ruled that Facebook couldn't force people to use their real names, a successful appeal in another German court has ruled otherwise. However, the ruling will yet again be appealed by the Schleswig-Holstein state's data protection body, who say that using real names "breaches German privacy laws and European rules designed to protect free speech online."
The administrative court in northern German Schleswig argued that Germany's privacy laws weren't applicable because Facebook has its entire European headquarters in Ireland, which is a country with different sets of laws and rules associated with privacy and using real names online. However, it doesn't seem likely that the ruling will be overturned yet again.
Facebook argues that its real-name policy protects users, rather than invading their privacy on the internet. This really only seems like a huge deal if you're pretending to be someone else on the internet, whether it'd be for parody purposes or to stalk someone else online (both of which are unnecessary), but it seems a lot of Germans are into that kind of thing. However, it won't last much longer.