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  • Writer's pictureDavid Manion

FTC Proposed Ban on Youth Data Monetization Would Affect 4% of Meta’s Users

The United States Federal Trade Commission (FTC) is proposing an outright ban today on Meta Platforms’ ability to monetize its underage users alleging that the tech company violated multiple provisions from a 2020 agreement with the agency.

The agreement is related to previous violations and to the Cambridge Analytica scandal involving the unconsented use of personal data from millions of users by the British firm, which used it to create profiles and target them with highly controversial political ads.

The FTC claims that Meta is also violating the Children’s Online Privacy Protection Act (COPPA) by misleading parents to believe they can control their children’s interactions via the company’s Messenger Kids application and by misrepresenting how third parties can access and exploit the data from these minors.

“The company’s recklessness has put young users at risk, and Facebook needs to answer for its failures”, commented Samuel Levine, Director of the FTC’s Bureau of Consumer Protection in regards to the situation.

According to data from Statista, around 4% of Instagram and Facebook users in the United States were minors.

Assessor’s Report on Compliance with 2020 Order Points to Gaps and Weaknesses

The 2020 settlement contemplated the appointment of a third-party assessor that could evaluate if the orders enforced by the FTC were being complied with by Facebook – as the company was formerly known.

According to a report submitted by that assessor covering the period between 25 October 2020 and 22 April 2021, multiple “gaps and weaknesses” were found related to the systems and policies enforced by the 2020 updated privacy order.

“While these issues varied in significance, the Commission staff’s investigation showed the most serious deficiencies and sheer number of total gaps and weaknesses overall present substantial risks to the public”, the FTC document reads.

One of those “weaknesses” involving Messenger Kids was coding errors that allowed minors “to participate in group text chats and group video calls with unapproved contacts under certain circumstances”.

In addition, children who used the app on Android devices were able to create group chats with both approved and unapproved contacts without any notification sent to the parents when these groups involving potential strangers were created.

Acting upon these findings, the FTC is proposing the imposition of strict limitations on Meta’s ability to collect and monetize the data from users under the age of 18 except in cases where it is absolutely essential for the company to provide its service and for security reasons.

“Under no circumstance would the Company be able to monetize that information or use it for its own commercial gain – whether for advertising, enriching its own data models and algorithms, or providing other benefits to the Company – even after the minor turns 18”, the FTC recommends.

This order would apply to other platforms apart from Facebook – i.e. Instagram and WhatsApp – and to all subsidiaries that the company merges or acquires.

In addition, the FTC is demanding a pause on the release of new products and features until it can demonstrate to the independent assessor that it has dealt with the “gaps and weaknesses” mentioned in the document.

Meta Deems the Proposed Order a “Political Stunt” by the FTC

Meta Platforms (META) has been given 30 days to respond to the FTC’s proposals. After this response is sent, the FTC will analyze the company’s arguments and ultimately decide if the 2020 order should be modified and extended to include these new provisions.

Of the five Commissioners that have voting power over these matters at the FTC, 3 voted in favor of the proposed modifications to the 2020 order. Commissioner Alvaro Bedoya abstained from voting and released a statement in which he claimed that he had “concerns” about the existence of a nexus between the original order, the violations cited by the FTC document, and the modified order – the one drafted in 2020.

Andy Stone, Meta’s Policy Communications Director, called the FTC’s proposed changes to the 2020 order “a political stunt”. In a tweet published a few hours ago, Stone asserted that the FTC is blindsiding the company as they gave Meta “no opportunity to discuss” their allegations.

“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”, Stone’s statement concluded.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


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