Context:

  • Facebook-­parent Meta in late November sued the FTC, claiming the regulator was making an “obvious power grab” and that its action caused the social media giant “immediate and irreparable” harm.

What is the case about?

  • Meta, the parent of Facebook, Instagram, WhatsApp, and Threads, sued the U.S. FTC on November 29 in an effort to stop it from reopening a past privacy settlement where the social media company was ordered to pay $5 billion to settle charges for violating an older FTC order.
  • The privacy settlement, which was made in 2019, enforced broad privacy restrictions on Meta.
  • The $5 billion penalty against Facebook was first announced in 2019 but is referred to as the 2020 privacy settlement.
  • The FTC described it as “the largest ever imposed on any company for violating consumers’ privacy.”

What are the new changes the FTC wants Meta to make?

  • The FTC, in May, proposed changes to the three­year­old agreement, noting that Meta had not fully complied with the previous terms.
  • The FTC alleged that Meta misled parents about the Messenger Kids app and misrepresented how some app developers could access private user data.
  • As part of the latest changes proposed by the FTC, Meta would be barred from profiting off the data it collected from children (users below 18) as well as the data from its virtual reality products.
  • Meta would also be restricted in its use of facial recognition technology, its launch of new products and features, and would have to provide even more user protections, as per the regulator.

Could the FTC’s proposed changes hurt Meta?

  • In its third quarter report this year, Meta recorded revenue of $34.15 billion, which was an increase of 23% year­over­year.
  • However, the company observed that rising legal and regulatory challenges across the European Union and the U.S. might affect its future financial results.

Why does Meta claim the FTC does not have authority over the issue?

  • Meta claimed that the FTC’s proposed changes to the 2020 agreement violate due process and that the regulator itself plays an “unconstitutional dual role.”
  • The company also believes that the FTC’s conditions would affect its ability to launch new products and services (without third­party approval), and would intrude on Meta’s private rights.

Has any other tech firm ever sued the FTC before?

  • While other companies have accused the FTC of overstepping its boundaries, Meta’s act of suing the FTC is an aggressive move that came after a federal judge allowed the FTC’s proceeding to take place.
Syllabus: Prelims