Antitrust Law Daily Wrap Up, PRIVACY NEWS: Facebook, WhatsApp notified of potential for FTC action concerning privacy policies in light of a proposed acquisition, (Apr 10, 2014)

By Jody Coultas, J.D.

Director of the FTC’s Bureau of Consumer Protection Jessica Rich sent a letter today to Facebook, Inc. and WhatsApp Inc. notifying the companies about their obligations to protect the privacy of their users in light of Facebook’s proposed acquisition of WhatsApp.

WhatsApp offers an instant messaging service with reportedly hundreds of millions of users worldwide. While both companies collect data from consumers, WhatsApp has made clear privacy promises regarding the limited nature of the data it collects, maintains, and shares with third parties. These promises exceed those made to Facebook users.

The purpose of the notification letter, according to Director Rich, was to make it clear that the FTC expected WhatsApp to continue to honor these promises to consumers if and when the acquisition is completed, especially considering that both companies had publicly stated that the promises in WhatsApp privacy policies would be honored. Both companies could be in violation of Section 5 of the FTC Act and, potentially, a 2011 FTC’s order against Facebook if these promises are not met.

According to the letter, the FTC has brought many cases alleging that failing to keep promises made about privacy constitute a deceptive practice under Section 5 of the FTC Act. The FTC has also made it clear that a company cannot use data in a manner that is materially inconsistent with promises made at the time the data was collected, absent express consent from the consumer.

In the 2011 order, Facebook settled FTC charges that it deceived consumers by failing to keep its privacy promises. Under the terms of the order, Facebook must get consumers’ affirmative consent before making changes that override their privacy settings, among other requirements.

Both companies were required to get affirmative consent from consumers before making any material changes to how they use data already collected from WhatsApp subscribers. The letter also stated that the companies must not misrepresent the extent to which they maintain the privacy or security of user data. Director Rich recommended that consumers be given the opportunity to opt out of any future changes to how newly-collected data is used.

Companies: Facebook, Inc., WhatsApp Inc.

News: Privacy FederalTradeCommissionNews