FTC wants to ban Facebook, Instagram from profiting off kids' data

(TND) — Federal regulators have suggested a ban on Meta's ability to make money off data it collects from children.

The Federal Trade Commission says Meta, which includes Facebook and Instagram, has "repeatedly violated its privacy promises" and misled parents.

"The company's recklessness has put young users at risk, and Facebook needs to answer for its failures," Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a news release.

This is the third time the FTC has taken action against Facebook for allegedly failing to protect users’ privacy, with orders handed down in 2012 and 2020.

The FTC believes Meta has failed to comply with its last order, which required the company to pay a $5 billion civil penalty and expanded the required privacy program.

An independent assessor found gaps and weaknesses in Facebook’s privacy program, according to the FTC.

Commissioners voted unanimously to issue an "Order to Show Cause," which calls upon Meta to answer for its alleged violations.

The FTC is considering modifying its 2020 order to include a blanket prohibition against monetizing data from users under the age of 18.

They also want to apply more scrutiny to new Meta products, further limit uses of facial recognition technology, and generally strengthen privacy obligations, the agency said.

The FTC claims Facebook violated prior orders in the way it allowed third-party app developers access to user information. Meta said in 2018 it would cut off such access if users had not used those apps in the previous 90 days, but the company continued to allow some developers to access that user data until mid-2020, the FTC said.

And the FTC says Facebook misrepresented that parents could control whom their children communicated with through its Messenger Kids product from 2017 to 2019.

The allegations over Messenger Kids are somewhat dated, one expert, Timothy Edgar, pointed out.

And a statement from one of the commissioners also acknowledged that the coding errors underlying the concerns with Messenger Kids had been resolved before the FTC’s 2020 order.

Edgar, a cybersecurity and privacy expert who teaches at Brown University and Harvard Law School, said it’s good to see the independent assessor identifying any potential privacy issues.

And he understands why the FTC would try and clamp down on Meta given its history with the agency.

But Edgar said the FTC is at risk of overstepping its authority if it tries to prohibit Meta from profiting off user data from children.

That's a policy choice that I can certainly see a lot of parents deciding would be a great thing, maybe even something for Congress to consider," he said. "But the FTC is a regulatory agency, and this seems to me to be a bit of a stretch in terms of their authority."

The FTC claims Meta has also violated the Children’s Online Privacy Protection Act.

That gives greater privacy protection to kids, but Edgar said it does not prohibit the “surveillance economy.”

The “surveillance economy” is Big Tech’s business model, he said. They collect data from us by offering free services, and they then monetize that data.

Edgar said he expects that Meta will challenge the FTC accusations and that this case could easily head to the courts.

If that happens, there’s the risk this action could backfire on the FTC, he said.

I could see a real test case for the FTC's authority over the digital economy coming out of a case like this,” Edgar said.

Commissioner Alvaro M. Bedoya acknowledged the "limits to the Commission’s order modification authority" in a statement.

“I look forward to hearing additional information and arguments and will consider these issues with an open mind,” Bedoya said.

The National Desk reached out to Meta for comment but did not receive a response before this story was published.