On Wednesday, the U.S. Federal Trade Commission (FTC) accused Facebook, which is now known as Meta, of misleading parents about the protections offered to children and proposed to tighten an existing privacy agreement. The proposal includes a ban on profiting from minors’ data, such as that collected through the Messenger Kids app and in Meta’s virtual reality business.
The FTC stated that Facebook had misled parents about their control over who their children had contact with in the Messenger Kids app and had also been deceptive about how much access app developers had to users’ private data, which breached the 2019 agreement on privacy. Facebook’s shares fell by as much as 2% after the announcement but pared most of those losses and were down by 0.3% at $238.50 at the close of the day.
Meta owns some of the world’s largest social networks, including Facebook and Instagram. However, the company is facing competition from the short video app TikTok, which has gained popularity among American teens in recent years. Meta relies heavily on digital ads that are targeted based on user’s personal data, with over 98% of its revenue coming from this source.
In response to the FTC’s action, Meta accused the FTC of political manoeuvring and failing to take action against Chinese companies like TikTok. Meta also stated that it would “vigorously fight this action and expect to prevail.”
The FTC’s proposal is the first step in the process of changing the 2019 agreement. Facebook will have 30 days to respond to the proposed changes, and the company can also appeal any commission decision to an appeals court. Debra Williamson of Insider Intelligence stated that “this is a very substantial statement from the FTC about whether or not Meta has fulfilled its duties to protect children,” adding that “the revenue implications are not likely very large.”
According to Williamson, 5.2% of Facebook’s monthly U.S. users are under 18, along with 12.6% of Instagram users. Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, said that “Facebook has repeatedly violated its privacy promises. The company’s recklessness has put young users at risk, and Facebook needs to answer for its failures.”
The FTC has previously settled with Facebook twice over privacy violations, with the first being in 2012. In 2019, Facebook agreed to pay a record $5 billion fine to resolve allegations that it had violated the 2012 consent order by misleading users about how much control they had over their personal data. The order was finalized in 2020.
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