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More than 190,000 tech-sector employees have lost their jobs since the start of 2023
Meta Platforms Inc. stock underperforms Friday when compared to competitors
The tech giant is trading its ownership of the business-software startup for a minority stake with no guaranteed payment in return
When Meta Platforms closed a deal last year to acquire business-software provider Kustomer for $1 billion, the tech giant had high hopes for how it could integrate the services of the startup.
Meta said the acquisition would enable companies to use its messaging apps for customer service, helping fulfill its longstanding ambition to turn its platforms into e-commerce giants.
The Federal Trade Commission proposed barring Meta Platforms META -0.32%decrease; red down pointing triangle from profiting off data it collects from young users, accusing the company of misleading parents and repeatedly violating a 2020 privacy order.
The FTC action Wednesday represents an unwelcome return to controversy for Meta and its major platforms, including Facebook and Instagram. The company agreed in 2019 to pay a $5 billion civil penalty following a previous FTC investigation into its privacy practices.
“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.”
The new allegations represent an aggressive move by the FTC, and the company vowed to contest them. Meta has 30 days to formally respond.
A Meta spokesperson termed the FTC action “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,” the spokesperson 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.”
The spokesperson added that the FTC was seeking to “usurp the authority of Congress to set industrywide standards and instead single out one American company.”
Some lawmakers and President Biden have proposed restricting targeted advertising to children. The FTC action could limit Meta’s ability to do that but wouldn’t affect other companies.
As part of the FTC’s proposed sanctions, Meta—which changed its name from Facebook in October 2021—would be prohibited from profiting from data it collects from users under 18. It would also be subject to other new limitations, including on its use of facial-recognition technology, and would be required to provide additional protections for users.
FTC Commissioner Alvaro Bedoya also questioned the agency’s authority to impose the restriction on monetization of kids’ data, saying the connection between the company’s actions and the penalty weren’t clear.
“There are limits to the Commission’s order modification authority,” Mr. Bedoya said in a statement. “Based on the record before me today, I have concerns about whether such a nexus exists” for the limits on use of children’s data. He voted for Wednesday’s action, which was approved on a 3-0 vote, but added that he looks forward to hearing additional arguments and “will consider these issues with an open mind.”
Some Meta critics characterized the FTC move as a long overdue response to a range of harms to kids caused by the company’s products.
“The FTC has rightly recognized Meta simply cannot be trusted with young people’s sensitive data and proposed a remedy in line with Meta’s long history of abuse of children,” said Josh Golin, executive director of Fairplay, a nonprofit that advocates for children’s online privacy.
The agency press release, which specifically cited kids’ data from virtual reality as part of its proposed ban, came less than a month after Meta opened its Horizon Worlds metaverse to teens.
The proposal marks the third time the agency has taken action against the company for failing to protect users’ privacy. The FTC filed a complaint against Facebook in 2011, and obtained an order in 2012 barring the company from misrepresenting its privacy practices.
The FTC later alleged that Facebook violated that order, by engaging in misrepresentations related to the use of millions of Facebook users’ data by a political analytics firm, Cambridge Analytica.
In 2019, Facebook agreed to a second order—which took effect in 2020—resolving claims that it had violated the FTC’s first order. Wednesday’s action alleges that Facebook violated the 2020 order as well. It also accuses the company of violating FTC rules protecting children’s data.
The FTC said on Wednesday that Facebook continued to give third-party app developers access to users’ private information after promising to cut off such access if users had not used those apps in the previous 90 days. In certain circumstances, Facebook continued to allow third-party app developers to access that user data until mid-2020, the FTC said.
In addition, the FTC has asked the company to respond to allegations that, from late 2017 until mid-2019, Facebook misrepresented that parents could control whom their children communicated with through its Messenger Kids product.
The FTC also said an independent third-party assessor, empowered to oversee the company’s privacy protections under the 2020 order, identified several gaps and weaknesses in Facebook’s privacy program.
The proposed changes to the 2020 order, which would apply to Facebook and Meta’s other services such as Instagram, WhatsApp, and Oculus, include a blanket prohibition against monetizing data of children and teens under 18—a provision that aims at the company’s core business of showing ads to users based on what it learns about their interests.
The FTC also wants the company to pause on the launch of new products and services unless it receives written confirmation from the independent assessor that its privacy program is in full compliance with privacy protections.
The FTC would place new limits on future uses of facial-recognition technology. For example, Meta would be required to obtain users’ affirmative consent for any future uses of facial-recognition technology.
