Facebook’s stock slides as
Federal Trade Commission confirms inquiry into whether the company engaged in ‘unfair acts’
Facebook’s
privacy practices are under investigation by the US Federal Trade Commission following a week of scandals and public outrage over the company’s failure to protect the personal information of tens of millions of users.
“The FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook,” said Tom Pahl, acting director of the FTC’s bureau of consumer protection in a statement on Monday noting that the investigation would include whether the company engaged in “unfair acts that cause substantial injury to consumers”.
Facebook’s stock, which already took a big hit last week, slid as a result falling by as much as 6% at one point.
“We remain strongly committed to protecting people’s information,” Facebook’s deputy chief privacy officer, Rob Sherman, said in a statement. “We appreciate the opportunity to answer questions the FTC may have.”
Facebook’s privacy practices have come under fire after revelations in the Observer that
Cambridge Analytica got data on Facebook users, including information on friends of people who had downloaded a psychological quiz app, even though those friends had not given explicit consent to sharing.
The fact that the data obtained by Cambridge Analytica was harvested in 2014 has raised questions about whether Facebook violated a 2011 consent decree with the FTC.
The consent decree included fines of up to $40,000 per violation, meaning that if Facebook were found in violation for all 50m users whose data was obtained by Cambridge Analytica, the penalty could conceivably be in the trillions of dollars.
David Vladeck, a former FTC official who oversaw the 2011 investigation, told the Washington Post that he believed there was a “strong possibility” that Facebook had violated its agreements.
Marc Rotenberg, executive director of the Electronic Privacy Information Center, said he believed Facebook was in violation of the 2011 settlement in letting Cambridge Analytica harvest data on friends of Facebook users.
“This is what Facebook was doing 10 years ago that people objected to, what the FTC should have stopped in 2011,” Rotenberg said. “It makes zero sense that when a person downloads their apps, they have the ability to transfer the data of their friends.”
Although Zuckerberg talked about changes in 2014 that would have prevented this, Rotenberg said it should have been banned already under the 2011 consent decree. He said the FTC had dropped the ball in failing to enforce that.
But Chris Hoofnagle, faculty director of the Berkeley Center for Law and Technology, said that legal language in the consent decree would make it difficult for the government to show that Facebook had violated the agreement, because it allows Facebook to give the information of a user’s friends to third-party developers.
“The consent decree doesn’t give the FTC a lot of traction, but what’s going to happen is what happened in the first FTC case,” Hoofnagle said, referring to the investigation that resulted in the 2011 agreement. “The FTC went in investigating A, then discovered B, C, D, E, F and G. The same thing is going to happen here. They’re going to go in under the consent decree logic, and then they’re going to find other wrongdoing.”
Facebook is also facing questions over reports that it collected years of contact names, telephone numbers, call lengths and information about text messages from Android users.
Facebook said on Sunday that this information was uploaded to secure servers and came only from people who gave explicit consent to allow it.
Officials said the data was not sold or shared with users’ friends or outside apps. They said the data was used “to improve people’s experience across Facebook” by helping to connect with others.
But the company did not spell out exactly what it used the data for or why it needed it.
Meanwhile, the chief law enforcement officers for 37 US states and territories are demanding to know when Facebook learned of the Cambridge Anaytica breach.
The officers say in a letter to
Zuckerberg that users’ trust in the social media platform is “broken”.
The attorneys general are asking how Facebook monitored what these developers did with all the data they collected and whether Facebook had safeguards to prevent misuse.
They also asked Zuckerberg for an update on how Facebook will allow users to more easily control the privacy of their accounts.