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FTC Fines Facebook $5 Billion for Privacy Violations

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3 years ago

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  • The Federal Trade Commission has fined Facebook $5 billion for violating the privacy of customers and imposed new accountability measures and restrictions for Facebook, WhatsApp, and Instagram.
  • The fine is the largest penalty imposed on a tech company for privacy violations ever, which comes after a yearlong investigation into Facebook’s involvement in the Cambridge Analytica data breach.
  • The FTC found that Facebook “deceived” their customers by allowing their data to be accessed by apps their friends used, despite telling the public they had stopped that practice.
  • The FTC also alleges that Facebook enforced data sharing policies based “on whether Facebook benefited financially from its arrangements with the developer.”

FTC Announcement 

The U.S. Federal Trade Commission (FTC) announced Wednesday that it was fining Facebook a record-breaking $5 billion for privacy violations as well as instituting sweeping privacy restrictions and oversight measures.

The penalty represents the largest fine that the FTC has ever imposed on a tech company by far. It is also the biggest penalty ever brought on a company for privacy violations, according to the FTC announcement.

The announcement comes after a yearlong investigation of Facebook over privacy violations.

That investigation was started right after The New York Times and The Observer of London reported that Facebook allowed British political consulting firm Cambridge Analytica to harvest the data of millions of Facebook users without their knowledge and build voter profiles from those users data without their consent.

Cambridge Analytica got the data from Facebook users who used a third-party gaming application called “This Is Your Digital Life.”

Although it has been estimated that only around 270,000 people used the app, the users who gave the app permission to access and acquire their data also gave the app permission to do the same for all of their Facebook friends.

That resulted in the personal information of nearly 87 million Facebook users being collected by Cambridge Analytica, despite the fact that the vast majority of those people had never given the firm permission to access their information, or even played the game.

Along with investigating Cambridge Analytica, the FTC’s investigation also expanded to look at other privacy concerns, such as the tech giant’s data-sharing policies with other third-party apps and device-makers that Facebook users might not have understood or been aware of.

FTC Findings

All of that culminated in the report and announcement released Wednesday by the FTC.

In addition to the $5 billion fine, the FTC’s announcement also stated that Facebook must “submit to new restrictions and a modified corporate structure that will hold the company accountable for the decisions it makes about its users’ privacy.”

That requirement, the FTC says, is mandated “to settle Federal Trade Commission charges that the company violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information.”

The FTC goes on to describe the 2012 order in question, saying that it explicitly “prohibited Facebook from making misrepresentations about the privacy or security of consumers’ personal information, and the extent to which it shares personal information.” 

The 2012 FTC order also required that Facebook “maintain a reasonable privacy program that safeguards the privacy and confidentiality of user information.”

Violations of 2012 Order

The FTC goes on to outline how Facebook specifically violated the 2012 order. The statement describes numerous instances, but the most significant examples center around privacy disclosures to customers.

For example, in 2012, Facebook put a disclosure on their Privacy Settings page telling users the information they shared with their friends could also be shared with the third-party apps their friends used. 

The FTC claims that four months later, Facebook removed the disclosure “even though it was still sharing data from an app user’s Facebook friends with third-party developers.”

Then in 2014, Facebook announced they would stop letting third-party developers collect data about the friends of app users. However, the FTC says that Facebook separately told the developers that they could continue to access that data until April 2015.

Even then, Facebook still waited “until at least June 2018 to stop sharing user information with third-party apps used by their Facebook friends,” the FTC said.

The statement then goes on to say, “Facebook did not screen the developers or their apps before granting them access to vast amounts of user data.” 

Facebook also claimed it had consequences for policy violations by third-parties, but it “did not enforce such policies consistently and often based enforcement of its policies on whether Facebook benefited financially from its arrangements with the developer,” the FTC alleged.

New Restrictions & Overhauls

In addition to spelling out Facebook’s privacy violations, the FTC announcement also included some of the new restrictions and oversight measures that Facebook will have to comply with under the settlement.

To ensure accountability with Facebook’s board of directors, the order will create “an independent privacy committee of Facebook’s board of directors,” in order to remove “unfettered control by Facebook’s CEO Mark Zuckerberg over decisions affecting user privacy.”

The settlement also requires the company to “designate compliance officers who will be responsible for Facebook’s privacy program,” and gives a third-party assessor more power to evaluate Facebook’s privacy programs.

Regarding restrictions the settlement imposes, Facebook will now have to conduct privacy reviews for any new or modified products and services before they can be implemented.

It will also be required to document any data breach involving 500 or more users. 

The FTC statement continues to include a laundry list of new requirements, like exercising more oversight over third-party apps, encrypting passwords, and more.

Notably, it also requires Facebook to “establish, implement, and maintain a comprehensive data security program.”

Also of huge significance is that these new restrictions and accountability measures will also apply to Facebook-owned companies WhatsApp and Instagram.

Response

The decision was approved by the FTC’s commissioners in a 3-to-2 vote earlier this month, with the three Republican commissioners voting to approve the settlement and the two Democrat commissioners voting to oppose.

In a statement to The New York Times, the three Republican commissioners, including agency chairman, Joseph Simons, said the settlement “will provide significant deterrence not just to Facebook, but to every other company that collects or uses consumer data.”

However, the two Democratic commissioners argued that the settlement did not do enough. They said that the $5 billion fine is just a slap on the wrist for Facebook, which made $55.8 billion in revenues last year alone. 

They also pointed out that the settlement did not actually do anything to change or restrict Facebook’s ability to collect and share their user’s personal information.

“The proposed settlement does little to change the business model or practices that led to the recidivism,” Democratic Commissioner Rohit Chopra wrote in his dissenting statement. “Nor does it include any restrictions on the company’s mass surveillance or advertising tactics.”

The Democratic commissioners also reportedly disliked the settlement because they wanted to take the case to court, and felt that the Facebook executives should have been held personally accountable.

The Republican commissioners, however, have said that they did not have a strong enough case to move it to court. 

See what others are saying: (The Chicago Tribune) (The Washington Post) (The New York Times)

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Kim Kardashian to Pay $1.26 Million to SEC Over Unlawful Crypto Promotion

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21 hours ago

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October 3, 2022

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According to the agency, stars and influencers must disclose how much money they earned for crypto advertising. 

Kardashian Pays Up

The U.S. Securities and Exchange Commission announced Monday that it has charged reality TV star Kim Kardashian for “unlawfully touting crypto security.”

Kardashian has agreed to pay $1.26 million in penalties, disgorgement, and interest while cooperating with the SEC’s investigation. The media mogul did not admit to or deny the SEC’s findings as part of the settlement, but she did agree to not promote crypto assets for three years. 

According to a statement from the SEC, federal regulators found that Kardashian “failed to disclose that she was paid $250,000 to publish a post on her Instagram account about EMAX tokens.”

“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” SEC Chair Gary Gensler said in a statement. 

The investigation stemmed from a post that Kardashian made on her Instagram story in the summer of 2021 promoting EthereumMax. In it, she asked her 330 million followers if they were interested in cryptocurrency while giving information about the coin. The post included a swipe-up link for users to get more information and potentially invest in it themselves. 

While Kardashian did include a hashtag denoting the post as an ad, the SEC said that did not go far enough. In the group’s statement, Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, explained that anyone advertising crypto assets “must disclose the nature, source, and amount of compensation they received in exchange for the promotion.”

A “Reminder” For Crypto Promoters 

As a result, the billionaire businesswoman is paying a $1 million penalty fee. On top of that, she has to pay $260,000 in disgorgement, accounting for the payment she received from Ethereum Max and interest. 

Kardashian’s lawyer released a statement saying the star has “fully cooperated with the SEC from the very beginning.”

“She remains willing to do whatever she can to assist the SEC in this matter,” the statement continued. “She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.”

This is not the first time Kardashian’s EMAX post landed her in hot water. A U.K. watchdog previously condemned her for shilling the coin, and she was sued earlier this year over allegations that she artificially inflated the coin’s value. 

Gensler said that he hopes the charges from the SEC will serve as “a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”

See what others are saying: (CNBC) (NPR) (Axios)

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Misinformation Makes Up 20% of Top Search Results For Current Events on TikTok, New Research Finds

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2 weeks ago

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September 19, 2022

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According to the report, the app “is consistently feeding millions of young users health misinformation, including some claims that could be dangerous to users’ health.”

Misinformation Thrives on TikTok

As TikTok becomes Gen Z’s favorite search engine, new research by journalism and tech group NewsGuard found that the video app frequently suggests misinformation to users searching for news-related topics. 

NewsGuard used TikTok’s search bar to look up trending news subjects like the 2020 election, COVID-19, the invasion of Ukraine, the upcoming midterms, abortion, school shootings, and more. It analyzed 540 videos based on the top 20 results from 27 subject searches, finding false or misleading claims in 105 of those posts. 

In other words, roughly 20% of the results contained misinformation. 

Some of NewsGuard’s searches contained neutral phrases and words like “2022 election” or “mRNA vaccine,” while others were loaded with more controversial language like “January 6 FBI” or “Uvalde TX conspiracy.” In many cases, those controversial phrases were suggested by TikTok’s own search bar. 

The researchers noted that, for example, during a search on climate change, “climate change debunked” showed up. While looking up COVID-19 vaccines, searches for “covid vaccine injury” or “covid vaccine exposed” were recommended.

Dangerous Results Regarding Health and More

The consequences of some of the false claims made in these videos can be severe. NewsGuard wrote in its report that the search engine “is consistently feeding millions of young users health misinformation, including some claims that could be dangerous to users’ health.”

Among the hoards of hazardous health claims were videos falsely suggesting that COVID-19 vaccines are toxic and cause permanent damage to organs. The report found that there are still several videos touting the anti-parasite hydroxychloroquine as a cure-all remedy, not just for COVID, but for any illness. 

Searches regarding herbal abortions were particularly troublesome. While certain phrases like “mugwort abortion” were blocked, the researchers found several ways around this that lead to multiple videos touting debunked DIY abortion remedies that are not only proven to be ineffective, but can also pose serious health risks. 

NewsGuard claimed that the social media app vowed to remove this content in July, but “two months later, herbal abortion content continues to be easily accessible on the platform.”

Other standard forms of conspiracy fodder also occupied space in top search results, including claims that the Uvalde school shooting was planned and that the 2020 presidential election was stolen. 

TikTok’s Search Engine Vs. Google

As part of its research, NewsGuard compared TikTok’s search results and suggestions with Google and found that, by comparison, the latter “provided higher-quality and less-polarizing results, with far less misinformation.”

“For example, searching ‘covid vaccine’ on Google prompted ‘walk-in covid vaccine,’ ‘which covid vaccine is best,’ and ‘types of covid vaccines,’” NewsGuard wrote. “None of these terms was suggested by TikTok.”

This is significant because recent reports show that young Internet users have increasingly turned to TikTok as a search engine over Google. While this might elicit safe results for pasta recipes and DIY tutorials, for people searching for current affairs, there could be significant consequences. 

NewsGuard said that it flagged six videos containing misinformation to TikTok, and the social media app ended up taking those posts down. In a statement to Mashable, the company pledged to fight against misinformation on its platform. 

“Our Community Guidelines make clear that we do not allow harmful misinformation, including medical misinformation, and we will remove it from the platform,” the statement said. “We partner with credible voices to elevate authoritative content on topics related to public health, and partner with independent fact-checkers who help us to assess the accuracy of content.”

See what others are saying: (Mashable) (CNN) (USA Today)

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Over 70 TikTok Creators Boycott Amazon as Workers Protest Conditions and Pay

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2 months ago

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August 17, 2022

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As the company fends off pressure on both fronts, the Amazon Labor Union continues to back election petitions around the country including one filed Tuesday in upstate New York.

Gen Z Goes to War With Amazon

More than 70 big TikTok creators have pledged not to work with Amazon until it gives in to union workers’ demands, including calls for higher pay, safer working conditions, and increased paid time off.

Twenty-year-old TikToker Elise Joshi, who serves as deputy executive director for the advocacy group organizing the boycott, Gen Z for Change, posted an open letter on Twitter Tuesday.

“Dear Amazon.com,” it reads, “We are a coalition of over 70 TikTok creators with a combined following of 51 million people. Today, August 16th, 2022, we are joining together in solidarity with Amazon workers and union organizers through our People Over Prime Pledge.”

Amazon has refused to recognize the Amazon Labor Union (ALU) since workers voted to unionize at a Staten Island warehouse in April, and it has resisted collective bargaining negotiations.

Although the ALU is not involved in the boycott, its co-founder and interim President Chris Smalls expressed support for it in a statement to The Washington Post, saying, “It’s a good fight to take on because Amazon definitely is afraid of how we used TikTok during our campaigns.”

While the ALU posts videos on TikTok to drum up popular support for the labor movement, Amazon has sought to win large influencers over to its side. In 2017, it launched the Amazon Influencer Program, which offered influencers the opportunity to earn revenue by recommending products in personalized Amazon storefronts.

Last May, the company flew over a dozen Instagram, YouTube, and TikTok stars to a luxurious resort in Mexico.

Emily Rayna Shaw, a TikTok creator with 5.4 million followers who has partnered with Amazon in the past, is participating in the boycott.

“I think their method of offering influencers life-changing payouts to make them feel as if they need to work with them while also refusing to pay their workers behind the scenes is extremely wrong,” she told The Post.

“As an influencer, it’s important to choose the right companies to work with,” said Jackie James, a 19-year-old TikTok creator with 3.4 million followers, who told the outlet she will cease doing deals with Amazon until it changes its ways.

The ALU is demanding that Amazon bump its minimum wage to $30 per hour and stop its union-busting activities.

Slogging Through the ‘Suffocating’ Heat

Amazon is also facing challenges from workers themselves, with some walking out this week at its largest air hub in California, where company-branded planes transport packages to warehouses across the country.

They are asking for the base pay rate to be raised from $17 per hour to $22 per hour.

A group organizing the work stoppage under the name Inland Empire Amazon Workers United said in a statement that over 150 workers participated, but Amazon countered that the true number was only 74.

The Warehouse Worker Resource Center counted 900 workers who signed a petition demanding pay raises.

Inland Empire Amazon Workers United has complained about the “suffocating” heat in the facility, saying that temperatures at the San Bernardino airport reached 95 degrees Fahrenheit or higher for 24 days last month.

Amazon spokesperson Paul Flaningan, however, claimed to CNBC that the temperature never surpassed 77 degrees and said the company respects its workers’ right to voice their opinions.

On Tuesday, the ALU backed another warehouse’s decision to file a petition for a union election in upstate New York, roughly 10 miles outside Albany.

The National Labor Relations Board requires signatures from 30% of employees to trigger an election.

See what others are Saying: (The Washington Post (CNBC) (Associated Press)

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