FTC Demands Social Platforms Explain How They Use People’s Data
How tech companies handle user information often seems cloaked in shadow, but the Federal Trade Commission made it clear that it’s eager to shine a light on their practices.
The FTC has issued orders to nine tech companies — Amazon, Facebook and subsidiary WhatsApp, Snap, Twitter, Google’s YouTube, TikTok owner ByteDance, Reddit and Discord — demanding information on how they collect user data and what they do with it, the agency revealed Monday afternoon.
According to a joint statement by commissioners Rohit Chopra, Rebecca Kelly Slaughter and Christine S. Wilson, tech’s pervasiveness makes its lack of transparency untenable.
“Social media and video-streaming companies now follow users everywhere through apps on their always-present mobile devices,” they said. “This constant access allows these firms to monitor where users go, the people with whom they interact and what they are doing. But to what end?…Too much about the industry remains dangerously opaque.”
Vague platitudes about respecting privacy and pledges to do better aren’t likely to suffice this time. The FTC is looking for specifics: It wants to know how these platforms collect, use, track, estimate or derive personal and demographic information; how they target advertising; whether they apply algorithms or data analytics to personal information; how they measure, promote and research user engagement, and how their tactics affect children and teenagers.
The commission is acting under Section 6(b) of the FTC Act, which allows it to conduct wide-ranging studies that aren’t tied to law enforcement, possibly giving it more latitude. The intention, according to Chopra, Slaughter and Wilson, is to “lift the hood on the social media and video-streaming firms to carefully study their engines.”
The commissioners voted to issue the orders in a 4-to-1 vote, with only one member, Republican commissioner Noah Joshua Phillips, dissenting.
The questions strike at the heart of how most social networks make money. Monetizing through ads and audience targeting is the bread and butter of such tech platforms, which explains why most of the companies didn’t immediately respond to the announcement, apart from a few.
Twitter issued a statement saying, “We’re working, as we always do, to ensure the FTC has the information it needs to understand how Twitter operates its services.” A Reddit spokesperson echoed the sentiment, while Discord noted that its chat app doesn’t serve ads. But, the company said, it “takes user privacy very seriously” and will cooperate to answer the questions.
The FTC has acted under Section 6(b) authority before, in February, to look into company acquisitions by Alphabet, Amazon, Apple, Facebook and Microsoft. The current study is just the latest in a string of inquiries marking a period of intensifying scrutiny of Big Tech.
Last week, the commission joined 48 U.S. states in bringing charges against Facebook over the tech giant’s acquisition of Instagram in 2012 and WhatsApp in 2014. The suit essentially accuses the company of buying up potential rivals to secure its social media monopoly, even though, as Facebook argues, the FTC approved those deals at the time.
In October, the Department of Justice and attorneys general of 11 states brought an antitrust suit against Google over its advertising practices. And top executives from Facebook and Google have regularly appeared before Congress to face questioning over its business and tech practices, joined at times by other leaders from Twitter, Amazon and Apple.
That’s just this year. In 2019, Facebook paid a record $5 billion over privacy violations related to the Cambridge Analytica scandal, and the FTC previously fined Facebook, YouTube and Musical.ly (now TikTok) over privacy issues.
The current action doesn’t rise to that level yet. But it’s clear the companies have reason to take the 45-day deadline for responses seriously.
As the commission indicated, the list of tech targets comprise social media and video-streaming platforms, which explains Facebook’s presence on federal agencies’ hit list once again. But that doesn’t explain how Amazon landed on it.
The FTC is well-acquainted with Amazon. Not only was it one of the subjects in the February study of tech acquisitions, but over the years, the commission has regularly dug into the e-tailer’s practices — from how it lists discounted prices in its marketplace to allegations that it unlawfully billed parents for unauthorized in-app purchases made by their children.
Most recently, a new FTC probe was launched in August to look into whether the company uses third-party seller data to benefit its own competing products. The announcement followed a hearing this past summer, when chief executive officer Jeff Bezos admitted the possibility that Amazon could be misusing seller data to unfairly compete with its marketplace merchants.
Amazon may be a great many things, but it’s not a social network. It once dabbled in social with the short-lived Amazon Spark, which closed in 2019. But in reality, it shares little in common with the FTC’s other subjects.
The closest thing might be Amazon’s Prime Video service, but that is more akin to Netflix or Hulu than TikTok or YouTube. And while it does offer advertising to brands, it’s based primarily on keywords or product searches.
When it comes to user privacy, Amazon’s woes primarily stemmed from its Alexa voice assistant, microphone-equipped Echo devices and the human reviewers who have listened to voice recordings. But in that scenario, Apple and Google would also be on the list.
Cohesive or not, the FTC’s latest actions ultimately point to one thing: Washington, D.C., may be in transition mode with a change in administration on the way, but the scrutiny of tech companies isn’t going away anytime soon.
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