Breaking down the FTC’s bombshell Meta accusations

As a result, the FTC wants to ban Meta from monetizing under-18s’ data, or from even using it to enrich its own data models and algorithms. It also wants the Facebook and Instagram parent to pause the release of “any new or modified product, service, or feature” until it has first satisfied an independent assessor that its privacy program is solid. And just for good measure, Meta “would be required to disclose and obtain users’ affirmative consent for any future uses of facial recognition technology.”

This is clearly going to be an epic battle between Meta and the regulator, so let’s have a quick run-through of the FTC’s claims—at least, the bits that aren’t redacted in its enforcement proposal—and Meta’s furious rebuttal:

FTC: An independent assessor looked at Meta’s privacy program and found numerous gaps and weaknesses, the most serious of which “present substantial risks to the public.”

Meta: The FTC rushed its new proposal through “just before an independent assessor was scheduled to update them on our compliance work and program enhancements we made over the past two years.” Meta will by the end of this year have invested $5 billion since 2019 on developing a “rigorous privacy program.”

FTC: Meta failed (again—after the Cambridge Analytica fiasco) to comply with its promise to tell users how it makes their information available to third parties. In 2018, Meta said it would remove a third-party app developer’s access to a user’s nonpublic data if that user hadn’t used the relevant app in the previous 90 days, but until mid-2020 Meta “in some instances continued to share users’ nonpublic information with Expired Apps.”

Meta: A “coding oversight” did sometimes give apps “access to data for longer than our additional 90-day limitation measure,” but “did not result in any apps accessing data contrary to people’s privacy settings.”

FTC: From 2017 to 2019, Meta told parents they could approve all their children’s contacts in Messenger Kids, but “coding errors allowed children to participate in group text chats and group video calls with unapproved contacts under certain circumstances” in group text chats on Android devices, and when adding participants to ongoing video calls.

Meta: The unapproved people were friends of approved friends, and the company disclosed the “coding error” to the FTC and parents in 2019. “The technical errors impacted a very small subset of group chat and video threads due to the overlapping controls we have in place to protect against errors like this.”

Meta also accused the FTC of pulling a “political stunt” and attempting to “usurp the authority of Congress to set industrywide standards and instead single out one American company while allowing Chinese companies like TikTok to operate without constraint on American soil.” 

That is presumably a reference to the bipartisan Kids Online Safety Act bill, which sponsors Senators Marsha Blackburn (R-Tenn.) And Richard Blumenthal (D-Conn.) Reintroduced this week after it failed to clear Congress last year—and perhaps also to the recently introduced Protecting Kids on Social Media Act bill, which enjoys less support from child advocates owing to inherent privacy problems. Coincidentally, Senators Ed Markey (D-Mass.) And Bill Cassidy (R-La.) Yesterday also reintroduced a bill called the Children and Teens’ Online Privacy Protection Act, which would crack down on Big Tech’s use of kids’ data, so now there are three competing proposals on the table.

I’m not convinced by Meta’s claim that the FTC is trying to pick on it while ignoring rivals. The agency would have nothing to gain by favoring TikTok, and it seems to just be using the law that’s currently available to it to crack down on Meta for repeatedly breaking previous agreements. I’d say Meta’s alleged infringements demonstrate why new, across-the-board protections are needed, but bills that may not pass should not preempt the possibility of more urgent enforcement.

Speaking of privacy law, the EU’s highest court issued a couple rulings this morning that clarify the impact of the General Data Protection Regulation, which came into effect five years ago this month (they grow up so fast). I sadly lack the space to discuss those in much depth, but here’s the gist:

1) An infringement of the GDPR doesn’t necessarily cause damage to a person, so not every infringement gives someone the right to claim compensation. However, there is also no “threshold of seriousness” for the emotional damage that someone can claim to have suffered, giving them a right to compensation.

2) When the GDPR says people have a right to get a copy of their personal data, that means everything, not just a summary. Yes, even whole documents and database extracts.

More news below.

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David Meyer

Data Sheet’s daily news section was written and curated by Andrea Guzman. 

NEWSWORTHY

Another round of layoffs at Shopify. E-commerce company Shopify is cutting 20% of its workforce, a move that impacts more than 2,000 employees and comes 10 months after it announced layoffs affecting about 1,000 people. In a blog post, CEO Tobias Lütke said ex-employees will get 16 weeks of severance plus a week for every year of tenure at Shopify, continued free access to the advanced Shopify plan, and other benefits. Shopify also announced that it’s selling its logistics business to Flexport in a deal that grants Shopify 13% equity. “Making the global supply chains efficient and software addressable is Flexport’s main quest, and so this is the perfect home for this part of Shopify,” Lütke said.

Chinese e-commerce giant moves HQ to Ireland. The parent firm of e-commerce sites Temu and Pinduoduo, PDD Holdings, has moved its headquarters from China to Ireland. In February, the “principal executive offices” were in Shanghai, but the latest filings now list Dublin, Reuters reports. The move comes as Temu aims to rival Chinese fast-fashion brand Shein, with its app hitting 50 million installs since its September launch. Ireland has attracted other tech companies, like Meta and Apple, with European headquarters thanks to its low headline corporation tax rate of 12.5%.

Waymo expands driverless rides. Waymo is doubling the size of its autonomous ride-hailing service in Phoenix. The Alphabet-owned company plans to connect downtown Phoenix with surrounding cities, including Tempe and Scottsdale. Covering 180 square miles, Waymo boasts that it’s the largest contiguous AV service area in the world. In San Francisco, meanwhile, Waymo is giving testers access to more of the city, including Fisherman’s Wharf and North Beach as it waits for a state permit to charge fares. Its competitor, GM-owned Cruise, has already been charging fares in a portion of the city.

SIGNIFICANT FIGURES

4.1 million

The number of paid subscribers that Paramount+ added last quarter, down from the almost 10 million it added in the previous quarter. Still, the streaming service has 60 million subscriptions total and even more monthly active users on its free service, Pluto TV.  

IN CASE YOU MISSED IT

‘Godfather of A.I.’ Says Elon Musk and the White House have asked him for advice since he quit Google—but they might not like what he has to say, by Orianna Rosa Royle

Microsoft’s chief economist is convinced that A.I. Will be ‘used by bad actors’—but says that cars can be dangerous, too, by Prarthana Prakash

Ashton Kutcher has launched an oversubscribed A.I. Investment fund worth $240 million: ‘This is a conversation we want to be in,’ by Eleanor Pringle

OpenAI’s former top safety researcher says there’s a ‘10 to 20% chance’ that the tech will take over with many or most ‘humans dead,’ by Tristan Bove

Elon Musk’s price war pays off as Ford is forced to heavily cut EV prices to compete with discounted Teslas, by Christiaan Hetzner

BEFORE YOU GO

Alexa, is my sushi almost here? Uber’s newest integration with Amazon's voice assistant, Alexa, will allow U.S. Users to track their Uber Eats orders. The Verge reports that the feature will announce updates about the status of an order from preparation to the moment it has been dropped off. But the integration is limited to tracking orders, not placing them. To use a voice assistant for placing orders on Uber Eats, users can turn to Siri or Google Assistant.