FTC watchdogs set loose on Facebook for "repeatedly" violating kids’ privacy for profit

Recklessness, broken promises, kids at risk.

The antitrust watchdogs at the Federal Trade Commission (FTC) tore into Facebook on Wednesday, saying the agency has caught the social media giant violating kids' data privacy for profit — for the third time. Now the FTC has had enough. In a new proposal to protect kids, the agency wants to ban the platform from ever monetizing youth data again. 

In a ferocious rebuke, the FTC said Facebook defied its direct order to protect kids' online privacy and broke the promise the company made in a 2019 consent order when it was forced to pay a $5 billion penalty for violating a 2012 order.

"Facebook needs to answer for its failures," said Samuel Levine, the FTC's Consumer Protection Bureau director, on Wednesday "Facebook has repeatedly violated its privacy promises. The company's recklessness has put young users at risk."

The FTC hit Facebook with that 2020 penalty after it caught the company doing the same thing it's accused of now — violating a federal privacy protection order (entered into in 2012) so it could continue profiting off users' data. The FTC's latest allegation is that the company has now been caught twice violating the 2019 order, potentially making this the third time overall that Facebook has defied a federal order.

This time, the FTC says, Meta (née Facebook) "failed to fully comply with the [2019 order], misled parents about their ability to control with whom their children communicated through its Messenger Kids app, and misrepresented the access it provided some app developers to private user data."

Although FTC complaint respondents could previously hire their own evaluators in these kinds of cases, that ethics loophole has been closed; Meta can't go auditor shopping. And in September of 2021, the initial assessment from global consulting firm Protiviti -- obtained by MLex newswire's Mike Swift -- found significant "gaps and weaknesses" in Facebook's internal response to the 2019 consent order. 

If finalized, the FTC's new proposed rule would go beyond barring Facebook from using minors' data -- whether culled from traditional or VR platforms -- for anything other than basic service and security verification. It would prevent Facebook from profiting off the data of users under age 18, and place new limits on Meta's use of facial recognition technology. 

It would also stop Meta from launching any new products or services "until it can demonstrate….that its privacy program fully complies with the Order and has no material gaps or weaknesses." Smith pointed out the unprecedented nature of the move. 

"This is the first time I'm aware of that the FTC has tried to block revenue or profit streams of a major tech company," he said in a Wednesday tweet. 

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Within hours of the FTC's announcement, Facebook appeared to be on the backfoot. In a seemingly panicked response, anonymous Meta executives hid their identities behind company spokesman Andy Stone while hissing bizarrely Sinophobic accusations and attacking a woman online. 

And not just any woman. After being charged by federal authorities with repeatedly violating a $5 billion child protection order, Facebook executives' strategy was to anonymously attack FTC chairwoman Lina Khan.

"This is a political stunt," the anonymous company figures said in Stone's Wednesday statement. 

"Khan's insistence on using any measure — however baseless — to antagonize American business has reached a new low," added Meta's executives, lying low.

The nameless official(s) also made more promises — this time, to "vigorously fight this action" — and falsely accused the FTC of trying to "single out one American company while Chinese companies, like TikTok, to operate without constraint on American soil."

As Facebook's executives know, however, TikTok has been under FTC constraint since 2019 -- when it paid a $5.7 million fine and entered into a consent decree with the FTC to also stop collecting kids' data.

Across the sprawl of the internet, however, the anonymous yelps from Meta's c-suite appeared to be almost wholly drowned out by an online roar of cheers from privacy advocates and digital rights activists who hailed the boldness of the FTC's "big swing."

"Brava!" tweeted author Roger McNamee. "In the 6-plus years of my activism for reform of Big Tech, this is by far the most important reform in the US."

"We would live in a very different -- and much better and kinder -- world if social media companies could not monetize the data they collect from kids," said Robert Weissman, president of the nonpartisan digital rights group, Public Citizen.

Another digital rights group, the Electronic Privacy Information Center, has been on the frontlines of the fight for kids' privacy protections since 2009. In a statement, EPIC Executive Director Alan Butler urged the FTC onward. 

"Meta has had over a decade to clean up its act, but even after a $5 billion fine, it continues to violate its users' privacy," Butler said in a statement.

"It is essential that the Federal Trade Commission vigorously enforce its orders and hold these companies to account when they fail to protect the privacy of their users."

As pointed out by privacy writer Robert Bateman, however, similar FTC data-profiting bans have resulted in more settlements and consent orders -- making it all the more likely that Meta will fight the proposed rule. 

Meta has 30 days to respond to the agency's investigative findings and proposal.