The U.S. Federal Trade Commission on Wednesday accused Metas Facebook of misleading parents about protecting children and proposed it tighten an existing privacy agreement to include a ban on monetizing underage data.
Specifically, the FTC said Facebook misled parents about how much control they had over who their kids interacted with on the Messenger Kids app and misled about how much access app developers had to users’ private data, what breached a 2019 privacy agreement.
Among the changes proposed by the FTC is to prevent Facebook from monetizing data collected about users under the age of 18, including in its virtual reality business. It would also face expanded restrictions on using facial recognition technology.
Meta shares fell as much as 2 percent on Wednesday but erased most of those losses, down 0.3 percent at $238.50 (about Rs.19,400).
Meta, which also owns Instagram, relies on digital ads, which are targeted based on its users’ personal information, for more than 98 percent of its revenue.
The company operates the world’s largest social networks, but is struggling to attract young users with its short-video app TikTok, which was hugely popular with American teenagers a few years ago.
In a statement, Meta said the FTC action was “a political stunt” and that the FTC had failed to take action against “Chinese companies like TikTok.”
“We will vigorously oppose this action and expect to prevail,” the company said.
The FTC’s move on Wednesday is the first step in the process of amending the 2019 agreement. Facebook has 30 days to respond. The Company may also appeal any commission decision to a court of appeals.
“This is a very material statement from the FTC as to whether or not Meta has complied with its child protection obligations,” Insider Intelligence’s Debra Williamson said, adding that “the revenue impact is unlikely to be very large.”
Williamson said that about 5.2 percent of Facebook’s monthly US. Users are under 18, along with 12.6 percent of Instagram users.
“Facebook has repeatedly violated its privacy promises,” said Samuel Levine, director of the FTC’s Consumer Protection Bureau. “The company’s recklessness has put young users at risk, and Facebook must answer for its mistakes.”
The FTC has previously reached out to Facebook twice over data breaches.
The first was in 2012. Facebook agreed in 2019 to pay a record US$5 billion (around Rs.408 billion) fine to resolve allegations that it breached the 2012 Consent Order by misleading users about how much control they had over their personal information. This assignment was completed in 2020.
Separately, the FTC sued to prevent Meta from buying virtual reality content maker Within Unlimited, but lost in court. The agency also asked a federal court in 2020 to order Facebook, Instagram, which it bought in 2012 for US$1 billion (roughly Rs.8,170 crore), and WhatsApp, which it bought for US$19 billion (roughly Rs.1,552.59 crore). Rs. bln) bought to sell in 2014. Proceedings ongoing.
© Thomson Reuters 2023
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