On Wednesday, the U.S. Federal Trade Commission charged Meta’s Facebook with deceiving parents about kid protections and suggested amending an existing privacy agreement to include a prohibition on profiting from the data of minors.
A 2019 privacy agreement was broken, according to the FTC, when Facebook deceived parents about how much control they had over who their children interacted with in the Messenger Kids app and were dishonest about how much access app developers had to users’ private data.
According to the FTC’s proposed regulations, Facebook cannot profit from user data obtained while they are under the age of 18, even in its virtual reality ventures. Additionally, it would have more restrictions when using facial recognition software.
Meta Stock Dropped
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The price of Meta stock dropped as much as 2% on Wednesday, but it quickly recovered and was down only 0.3% at $238.50.More than 98% of the revenue generated by Meta, which also owns Instagram, comes from digital ads that are specifically targeted based on the information about its users.
The corporation manages the largest social networks in the world, but it is competing with TikTok, a short video app that gained enormous popularity among American teenagers a few years ago, for the attention of young users.
The Claim Of Meta
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Meta claimed in a statement that the FTC’s move was “a political stunt” and that the agency neglected to take action against “Chinese companies, like TikTok.”
The business promised a fierce defense of its position and expressed confidence in winning.
The FTC’s action on Wednesday marks the beginning of the process to modify the 2019 agreement. Facebook will reply within 30 days. Any commission judgment may also be appealed by the firm to an appeals court.
Debra Williamson of Insider Intelligence stated that “this is a very substantial statement from the FTC about whether or not Meta has fulfilled its duties to protect children,” noting that “the revenue implications are not likely very large.”
According to Williamson, 12.6% of Instagram users and 5.2% of Facebook’s monthly U.S. users are under the age of 18.
The Claim Of FTC’s Bureau Of Consumer Protection
The director of the FTC’s Bureau of Consumer Protection, Samuel Levine, claimed that Facebook had frequently broken its privacy commitments. “Facebook needs to take responsibility for its mistakes after the company’s carelessness put young users at risk.”
Facebook and the FTC have previously reached settlements over privacy issues.
The first one happened in 2012. In order to satisfy claims that it had broken the terms of the 2012 consent decree by deceiving users about how much control they had over their personal data, Facebook agreed to pay a record $5 billion fine in 2019. The agreement was completed in 2020.
Separately, the FTC filed a lawsuit to stop Meta from purchasing Within Unlimited, a producer of virtual reality content, but it was unsuccessful.
Additionally, the agency asked a federal court in 2020 to order Facebook to sell WhatsApp and Instagram, which it had purchased for $1 billion each in 2012 and 2014. The case is still open.