FTC Proposes New Rules Barring Facebook from ‘Monetizing Youth Data’

A pedestrian walks in front of a Meta sign at Facebook headquarters in Menlo Park, Calif., on Oct. 28, 2021. (Justin Sullivan/Getty Images)

The Federal Trade Commission (FTC) on May 3 alleged Facebook failed to comply with a 2020 privacy order and proposed “blanket prohibitions” barring the social media giant from monetizing the data of young users.

Wednesday’s announcement represents the third time the FTC has taken action against Facebook, now called Meta, over privacy issues. The tech company agreed to pay a historic $5 billion fine in 2019 to settle the previous investigation, reaching a settlement with FTC that creates greater accountability at its board of directors level.

FTC is now seeking to modify the 2020 privacy order that would prohibit Meta from profiting from data of users under 18, including those collected through virtual-reality products. That would also expand the limitations on the company’s use of facial recognition technology.

The proposed changes would apply to all of Meta’s services, including Facebook, Instagram, WhatsApp, and Oculus.

The FTC specifically accused Facebook of misleading parents about how they could control with whom their children communicate on its Messenger Kids app. The agency alleged that the company misrepresented the access Facebook granted to third-party app developers to private user data.

“Facebook has repeatedly violated its privacy promises,” FTC consumer protection bureau director Samuel Levine said in the statement. “The company’s recklessness has put young users at risk, and Facebook needs to answer for its failures.”

In response, Meta described the announcement as a “political stunt.”

“Despite three years of continual engagement with the FTC around our agreement, they provided no opportunity to discuss this new, totally unprecedented theory,” Meta said in a Wednesday statement.

“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 California-based company said the company has implemented “an industry-leading privacy program under the terms of our FTC agreement.” “We will vigorously fight this action and expect to prevail.”

FTC’s scrutiny over Facebook dates back to 2011. At that time, FTC accused Facebook of failing to keep its promise about users’ privacy. They finalized the order in 2012.

But in 2019, the FTC alleged the company violated the 2012 order by deceiving users about their ability to control the privacy of their personal information. Facebook later vowed to shift its approach to better-protecting users’ privacy and agreed to pay a record $5 billion fine to settle the agency’s charges. They also reached the second settlement, which took effect in 2020.

The FTC said Wednesday that Facebook now violated that 2020 privacy order. In the statement, the agency said an independent assessor, which was required to evaluate the company’s privacy practices under that order, identified “several gaps and weaknesses in Facebook’s privacy program.”

As part of the proposed changes to the FTC’s 2020 order, Meta would be required to pause launching new products and services without “written confirmation from the assessor that its privacy program is in full compliance” with the order.

The new rules would also cover any companies that Meta would acquire or merge with in the future.

Meta has 30 days to respond to the FTC’s latest action.

The Associated Press contributed to this report.