FTC proposes to ban Meta from monetizing youth data

The Federal Trade Commission of the United States announced on Wednesday that it has proposed changes to a 2020 privacy order which it claims Meta violated by misleading parents about their ability to track and control their children’s communication with others on its Messenger Kids app, and not being transparent about how much access app developers had to users’ private data.

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

Among the government agency’s proposed changes are a blanket ban against making money from the data of users under the age 18, pause on the launch of new services and products until the social media company achieves full compliance with the order’s requirements, a commitment to comply with the FTC order for any companies it acquires or merges with, as well as informing and obtaining users’ affirmative consent for the use of facial recognition technology, 

As reported by Reuters, Meta generates 98% of its revenue from digital ads shown to users based on their personal data. 

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Despite operating some of the world’s biggest social media apps including Instagram and Facebook, Meta is also in fierce competition with ByteDance-owned short video platform TikTok, which has become immensely popular among American teens over the last few years, but is currently facing a potential nationwide ban.

Following the FTC’s announcement, Meta said in a statement that the move is ‘’a political stunt’’.

‘’Let’s be clear about what the FTC is trying to do: usurp the authority of Congress to set industry-wide standards and instead single out one American company while allowing Chinese companies, like TikTok, to operate without constraint on American soil,’’ the company said.

‘’We have spent vast resources building and implementing an industry-leading privacy program under the terms of our FTC agreement. We will vigorously fight this action and expect to prevail,” it added.

The government agency has settled with Facebook twice before, with the first one reached in 2012. In 2019, the company agreed to pay a record-breaking fine of $5 billion to resolve allegations that it deceived users about the amount of control they had over their data. The FTC finalized the order in 2020.

In another case, the FTC took legal action to prevent Meta from acquiring VR content creator Within, accusing it of trying to build a ‘’virtual reality empire’’. However, Meta received the approval for the acquisition and completed it earlier this year.

Meanwhile, in 2020, the FTC also asked a federal court to require the company to sell Instagram, which it acquired for $1 billion in 2012, and messaging app WhatsApp, which it acquired for $19 billion in 2014. The case is currently ongoing.