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Meta earns from minors’ data, FTC recommends prohibition

Meta earns from minors' data, FTC recommends prohibition

U.S. Federal Trade Commission filed charges against Meta’s (META.O) Facebook on Wednesday, accusing the company of misleading parents about the safety of their children online and suggesting that the company alter its privacy agreement to ban monetary gain from the personal information of minors.

According to the FTC, Facebook violated a 2019 privacy agreement by lying to parents about the level of control they had over Messenger Kids contacts and the level of access app developers had to users’ personal information.

The FTC has proposed laws that would prevent Facebook, including its VR projects, from making money off of data collected from users under the age of 18. More limitations on the use of facial recognition technology would also be imposed.

Initially falling by as much as 2% on Wednesday, Meta stock is now trading down by only 0.3% at $238.50.

Meta, the company that owns Instagram, derives more than 98% of its revenue from personalized digital advertisements based on user data.

The company runs the most popular social networks worldwide, but it faces stiff competition from TikTok, a short video app that has seen explosive growth among American youths in recent years.

In a statement, Meta called the FTC’s action “a political stunt” and criticized the FTC for not going after “Chinese companies, like TikTok.”

The company said it would vigorously defend its stance and was confident of victory.

On Wednesday, the FTC took the first step toward revising the 2019 pact. The response time from Facebook is 30 days. The company has the right to appeal any commission judgment to a higher court.

As Debra Williamson of Insider Intelligence puts it, “this is a very substantial statement from the FTC about whether or not Meta has fulfilled its duties to protect children,” while she adds that “the revenue implications are not likely very large.”

Williamson claims that among monthly Facebook users in the United States, only 5.2 percent are under the age of 18.

Samuel Levine, head of the Federal Trade Commission’s Bureau of Consumer Protection, said that Facebook often violated users’ privacy. After the company’s carelessness put young users in danger, “Facebook needs to take responsibility for its mistakes.”

In the past, Facebook and the FTC have negotiated agreements to resolve privacy concerns.

The initial occurrence was in 2012. Facebook settled charges that it had violated the conditions of the 2012 consent decree by misleading users about the extent to which they could exercise control over their personal data by agreeing to pay a record $5 billion fine in 2019. In 2020, the agreement was finalized.

The FTC also attempted, unsuccessfully, to block Meta’s acquisition of Within Unlimited, a virtual reality content developer. The government also requested that a federal court issue an order in 2020 compelling Facebook to unload the $1 billion in 2012 and 2014 acquisitions of WhatsApp and Instagram. The investigation is ongoing.

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About MahKa

MahKa loves exploring the decentralized world. She writes about NFTs, the metaverse, Web3 and similar topics.

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