FTC Pushes for Total Ban on Meta Profiting From Children’s Data

The Federal Trade Commission has accused Meta of violating a suite of child privacy protections such as the Children’s Privacy Protection Act (COPPA) and proposed sweeping changes on how the social giant operates, including a ban on monetizing kids’ data.

“Meta has successfully stayed out of the privacy spotlight in recent months, especially as the scrutiny over TikTok and its Chinese ownership has grown,” Insider Intelligence principal analyst Debra Aho Williamson told Adweek.

“But today’s FTC announcement confirms that the government is still paying close attention and plans to enforce—and potentially strengthen—the agreements it had with Meta,” she added. “Its longstanding issues with privacy protection are far from over.”

Top line

Citing a 2020 agreement on privacy, the FTC said Meta-owned Facebook misled parents over how much control they had over who their kids could communicate with in the Messenger Kids app, as well as how much access app developers had to users’ private data.

Under the FTC’s proposed changes, Meta would be prohibited from profiting from the data of people under 18, including through its virtual reality products and facial recognition technology.

These latest rules would apply to Facebook and Meta’s other platforms, including Instagram, Oculus and WhatsApp. It would also cover any new companies Meta may merge with in the future.

However, the proposed changes would not have a significant impact on Meta’s ad revenue in the U.S., according to Williamson.

The vast majority of monthly users of Facebook and Instagram are over 18. On Facebook, only 5.2% of monthly U.S. users will be under 18 this year, according to Williamson. On Instagram, only 12.6% will be under 18. While advertisers use both platforms to target teens, the majority of ad spending will naturally go toward reaching adults, who make up nearly 95% of Facebook’s U.S. users and more than 87% of Instagram users.

“However, the FTC’s order would have a substantial impact on Meta’s ability to innovate and launch new products,” Williamson added. “It would prohibit Meta from launching new or modified products unless it gets written confirmation from an assessor that it is in compliance with the order. If this portion of the proposed changes takes effect, the FTC will effectively be putting an enormous speed bump on Meta’s new product roadmap.”

Between the lines

Facebook has already settled twice with the FTC over privacy violations. The first violation dates back to 2012, alleging Facebook misled users about how much control they had over their personal data. Facebook agreed to pay $5 billion in fines to remedy those allegations in 2019. That order was finalized in 2020.

In 2020, Facebook settled for $5 billion in civil penalties with the FTC after the Cambridge Analytica scandal. Under the settlement, the tech giant agreed to independent assessments of its updated privacy program.

The latest alleged violations came forth after a review by an independent assessor that found “several gaps and weaknesses in Facebook’s privacy program” that posed “substantial risks to the public,” according to the FTC.

Responding to the FTC’s proposal, Meta spokesperson Andy Stone called it a “political stunt,” accusing the agency of attempting to “usurp the authority of Congress to set industrywide standards.”

Bottom line

Meta has 30 days to challenge these new findings, after which the agency will decide whether updating the 2020 order “is in the public interest or justified by changed conditions of fact or law,” according to the FTC.