The U.S. Federal Trade Commission (FTC) has accused Meta’s Facebook of deceiving parents about safeguards for children and has proposed strengthening an existing privacy agreement. The proposed changes aim to include a ban on profiting from minors’ data.
According to the FTC, Facebook misled parents regarding the level of control they had over their children’s contacts in the Messenger Kids app. The company was also found to be deceptive about the extent to which app developers could access users’ private data, which violates a 2019 privacy agreement.
The FTC’s proposed measures include prohibiting Facebook from making money from data collected on users under the age of 18, including within its virtual reality business. Additionally, there would be stricter limitations on the use of facial recognition technology. Following this news, Meta’s shares experienced a brief decline of up to 2% but later recovered, ending the day with a 0.3% decrease at $238.50.
Meta, the parent company of Facebook and Instagram, heavily relies on targeted digital advertising based on users’ personal data, which accounts for more than 98% of its revenue. As the company competes with TikTok for the attention of young users, it views the FTC’s actions as a political move and claims that the commission has failed to take similar actions against Chinese companies like TikTok.
Meta has stated its intent to vigorously challenge the FTC’s proposed measures and expects to come out victorious. This initial step by the FTC marks the beginning of the process to modify the 2019 agreement, giving Facebook 30 days to respond. The company can also appeal any decisions made by the commission to an appeals court.
Debra Williamson from Insider Intelligence views the FTC’s action as a significant statement regarding Meta’s responsibility to protect children. However, the financial impact of these measures on Meta is expected to be relatively small. Williamson noted that approximately 5.2% of Facebook’s monthly U.S. users and 12.6% of Instagram users are under the age of 18.
Samuel Levine, director of the FTC’s Bureau of Consumer Protection, stated that Facebook has repeatedly violated privacy commitments and that its recklessness has jeopardized young users’ safety. The FTC has previously settled with Facebook twice over privacy violations, with the first instance occurring in 2012. In 2019, Facebook agreed to pay a record $5 billion fine to resolve allegations of misleading users about data control, and the order was finalized in 2020. Additionally, the FTC filed a lawsuit to block Meta’s acquisition of virtual reality content maker Within Unlimited, but the agency lost the case in court. In 2020, the FTC also requested a federal court to force Facebook to sell Instagram and WhatsApp, acquisitions made in 2012 and 2014, respectively.
