FTC set to get in Facebook’s face, and its books

The US Federal Trade Commission has announced it is formally investigating Facebook’s privacy practices, which is unlikely to end well.

This was pretty inevitable given the spectacular amount of press surrounding the Cambridge Analytica stories. While it can be reasonably argued that it’s pretty naïve to be all shocked when you find out a social media company has been exploiting the personal data you willingly give it for profit, this scandal seems to have broken the dam on pent-up concerns about data privacy.

Again, that was bound to happen sooner or later. The rules on personal data have been made up on the fly because we’ve only had social media for a decade or two. It’s quite possible that Facebook has done nothing wrong in the legal sense but the world is now asking whether or not it should have been allowed to play so fast and loose with our digital identities regardless.

“The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers,” said Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection. “Foremost among these tools is enforcement action against companies that fail to honour their privacy promises, including to comply with Privacy Shield, or that engage in unfair acts that cause substantial injury to consumers in violation of the FTC Act.

“Companies who have settled previous FTC actions must also comply with FTC order provisions imposing privacy and data security requirements. Accordingly, the FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices.”

The implication there is that Facebook made some specific vows to the FTC that it may have violated. Even if it hasn’t, this kind of non-public investigation (and surely there will be leaks) will allow the FTC to dig around as much as it wants. Since the origin of this story was the relatively benign matter of exploiting a loophole and then selling that data on, it seems improbable that further such transgressions won’t be uncovered.

This news alone has spanked the Facebook share price down another few percent, just as it’s trying to recover from its latest PR challenge. Over the weekend there was widespread reporting that Facebook has been gathering the details of Android users’ contacts details, including phone numbers and text messages. A BBC journalist was taken aback to find his entire contact list among the files presented to him when he downloaded all the data Facebook has on him.

Facebook felt moved to defend itself on this specific count, insisting it has not been logging people’s call and text history without their permission. Apparently that is an opt-in feature for people using Messenger or Facebook Lite on Android, that you can opt out of whenever you want. Facebook also insisted it doesn’t collect the content of calls or texts and doesn’t sell any of this stuff on. Incidentally your correspondent doesn’t seem to have opted into this feature.

The fact that Facebook is having to defend an opt-in feature that has been in place since 2015 shows how much this story has changed the rules of the game. People have become hyper-aware of how freely they agreed to surrender information to Facebook and are retrospectively indignant. Unless Facebook successfully addresses this sentiment its share price will probably continue to fall.