The Quick Report

Facebook Sues FTC for Ability to Monetize Children’s Data

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Meta, the parent company of Facebook, has sued the Federal Trade Commission (FTC). They challenge the agency’s authority to impose sanctions preventing the social media company from monetizing the data of children.

FTC issues blanket sanctions to prevent Facebook from monetizing youth data

In a May 2023 press release, the Federal Trade Commission (FTC) proposed changes to a 2020 privacy order enacted on Facebook. The FTC claims the social media company failed to comply with the 2020 order. They also claim Facebook has violated the Children’s Online Privacy Protection Act Rule (COPPA Rule). This is the third time the FTC has taken action against Facebook for allegedly failing to protect the privacy of its users. As part of the 2020 order, Facebook was required to pay a $5 billion civil penalty.

In the latest allegations, the FTC claims Facebook misled parents about their ability to control whom their children communicated with. Specifically, through the Messenger Kids app, alleging the company misrepresented the access it provided to some app developers in obtaining private user data.

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Facebook had promised children using Messenger Kids would only be able to communicate with contacts approved by their parents. However, the FTC alleges that children were still able to communicate with unapproved contacts in group chats and group video calls and certain circumstances. The FTC said these misrepresentations violated the 2012 order, the FTC Act, and the COPPA Rule. Under the latter rule, operators of websites/online services directed at children under 13 must notify parents and obtain their verifiable parental consent before collecting personal information from children.

In September 2022, Meta was fined $400 million for breaking European Union data privacy laws for its treatment of children’s data on Instagram, the New York Times reported.

“Facebook has repeatedly violated its privacy promises,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The company’s recklessness has put young users at risk, and Facebook needs to answer for its failures.”

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The Commission Voted 3-0 to Issue the Order to Show Cause

The Order to Show Cause alleges Facebook violated both the 2012 and 2020 orders. It alleges the company continued to give app developers access to users’ private information. This is after Facebook promised in 2018 to cut off such access if users had not used those apps in the previous 90 days. Facebook, in certain circumstances, also continued to allow third-party app developers to access that user data until mid-2020.

According to a newly unsealed complaint reported by the New York Times, Meta “routinely” documented children under 13 on Instagram and collected their data.

FTC Recommends Prohibition of Facebook’s Monetization of Youth Data

Among the proposed changes the FTC has suggested for the 2020 order is prohibiting Facebook from profiting from the data it collects from all users under the age of 18. This includes its virtual reality products. The FTC also wants to expand other limitations, including the use of facial recognition technology. The FTC has proposed that Facebook be required to provide other additional protections for users.

The Core of the Proposals by the FTC are:

  • Pause on the launch of new products, services
  • Extension of compliance to merged companies
  • Limits on future uses of facial recognition technology
  • Strengthening existing requirements

The FTC’s proposals for blanket prohibition are directed at the parent company Meta. Therefore, it would apply to several of the company’s properties including Facebook, Instagram, WhatsApp, and Oculus.

When the proposals were introduced in May, the FTC formally asked Meta to respond in 30 days to the proposed findings from the agency’s investigation.

Now, Facebook has filed a lawsuit against the FTC to fight the proposals.

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Facebook Sues FTC to Stop Restrictions on Monetizing Children’s Data

In November, Meta filed a lawsuit against the Federal Trade Commission (FTC). The social media company is attempting to prevent regulators from reopening the 2020 privacy settlement. Meta paid a $5 billion fine in the agreement.

Among other things, Meta also wants to stop the FTC from enacting prohibitions that would prevent it from profiting from data it collects from users under 18.

In the lawsuit, which was filed in federal court in Washington, D.C., Meta Platforms Inc. said it was challenging “the structurally unconstitutional authority exercised by the FTC” in reopening the privacy agreement.

“Meta respectfully requests that this Court declare that certain fundamental aspects of the Commission’s structure violate the U.S. Constitution and that these violations render unlawful the FTC Proceeding against Meta,” the company wrote in its legal complaint.

For Meta’s part, they believe the FTC is going too far in its proposed restrictions on the company. The lawsuit says the proposals by the FTC “would dictate how and when Meta can design its products.”

Meta Argues FTC Proceedings Are Unconstitutional

Meta is also arguing that the way the FTC handles its administrative proceedings is unconstitutional.

“The Commission has a dual role as prosecutor and judge in violation of the Due Process Clause,” Meta wrote in its lawsuit. It is challenging “the structurally unconstitutional authority exercised by the FTC through its Commissioners in an administrative reopening proceeding against Meta.”

According to a Bloomberg report, a Meta spokesperson said the FTC was acting as “prosecutor, judge, and jury in the same case.”

The company asked the court to “declare that certain fundamental aspects of the Commission’s structure violate the US Constitution and that these violations render unlawful the FTC Proceeding against Meta.”

Meta is also seeking a preliminary injunction to prevent the FTC proceeding pending the resolution of its lawsuit.

Democrats Call Lawsuit Embarassing

Democrats call Meta’s lawsuit “embarrassing,” “frivolous,” “a stunt, ” and “a weak attempt to avoid accountability.”

US Rep. Frank Pallone, Jr. (D-N.J.), the ranking Democrat on the House Commerce Committee slammed Meta over the lawsuit.

“This lawsuit is embarrassing,” Rep. Pallone said in a statement. “It speaks volumes that Meta would rather launch a frivolous lawsuit against the agency tasked by Congress with protecting American consumers, especially our children than do the serious work needed to reform their platforms.”

US Sen. Ed Markey (D-Mass.) also lambasted Meta over the lawsuit.

“Meta’s baseless lawsuit is a weak attempt to avoid accountability for its repeated failures to protect kids’ privacy online,” Sen. Markey said. “In the face of a potentially massive fine, Meta’s adoption of extreme, right-wing legal theories to challenge our country’s premier consumer protection agency reeks of desperation.”