The Federal Trade Commission (FTC) has leveled accusations against Meta’s Facebook, claiming the company has deceived parents regarding the safety measures in place for children using its platforms. The FTC is advocating for an amendment to the existing privacy agreement to prohibit Facebook from monetizing data gathered from users under 18 years old.
According to the FTC, Facebook misrepresented the level of control parents had over their children’s interactions in the Messenger Kids application and misled users about the access that app developers had to their private information, potentially violating the 2019 privacy agreement.
The proposed amendments would restrict Facebook from profiting from data collected from minors, which includes its virtual reality sector. In addition, the company could face tighter regulations concerning its use of facial recognition technologies.
Shares of Meta saw a drop of up to 2 percent on Wednesday, although they later recovered somewhat, closing down by 0.3 percent at $238.50 (approximately Rs. 19,400).
Meta, which also owns Instagram, depends on digital advertising targeted based on user data for over 98 percent of its revenue.
While Meta manages some of the largest social networks globally, it is currently vying for the attention of younger audiences against competing platforms like TikTok, which has gained significant traction among American teenagers in recent years.
In its response to the FTC’s actions, Meta labeled the proceedings “a political stunt” and criticized the commission for not taking similar actions against companies from China, like TikTok.
“We will strongly contest this action and expect to win,” Meta stated.
This recent move by the FTC marks the initial phase in the process of modifying the 2019 privacy agreement, with Facebook granted a 30-day period to respond. The company retains the option to appeal any decisions made by the commission in court.
Debra Williamson of Insider Intelligence commented that the FTC’s statement is significant regarding Meta’s responsibility to safeguard children, although she noted that the financial impacts might not be drastic.
Williamson also pointed out that approximately 5.2 percent of Facebook’s monthly active users in the U.S. are under 18 years old, alongside 12.6 percent of Instagram users.
Samuel Levine, director of the FTC’s Bureau of Consumer Protection, stated, “Facebook has consistently breached its privacy commitments. The company’s recklessness has endangered young users, and it must account for its shortcomings.”
This is not the first time the FTC has had to settle with Facebook over privacy issues. A settlement in 2012 was followed by a record $5 billion (around Rs. 408 crore) fine in 2019 for allegations of misleading users about their control over personal data, with that order finalized in 2020.
In a separate matter, the FTC attempted to block Meta’s acquisition of the virtual reality developer Within Unlimited but lost the case in court. Additionally, the agency sought to compel Facebook to divest Instagram and WhatsApp, which it purchased for $1 billion (approximately Rs. 8,170 crore) in 2012 and $19 billion (around Rs. 1,552.59 crore) in 2014, respectively. This case is still ongoing.
© Thomson Reuters 2023
