US NGOs to FTC re FB Jan 2019 v4

Transcript

1 9 January 24, 201 Chairman Joe Simons Federal Trade Commission Washington DC embers of the Commission, Dear Chairman Simons and M is now finalizing a We write to you about a recent news report that the Commission 1 against penalty Facebook regarding violations of the 2011 consent order. he urgency of this matter cannot be overstated. Almost This action is long overdue and t have passed since many of our organizations first brought the Commission’s attentions ten years to Facebook’s business practices that threaten privacy and are in fact “unfair and deceptive trade 2 And eight years have passed since the practices.” Commission ounce d the settlement first ann 3 announced it was And now almost a year has passed since the Commission with Facebook. 4 reopening the following the Cambridge Analytica breach . investigation Remarkably, the Commission has not imposed a single fine against , nor has the Facebook additional authority was needed . In fact, four Commission suggested that chairs of the previous FTC held out the Facebook consent order as an example of the agency’s rob ust enforcement 5 to Congressional committees and European official s . authority 1 Tony Romm and Elizabeth Dwoskin, U.S. regulators have met to discuss imposing a record - setting fine against Facebook for privacy violations , Wash. Post (Jan. 18, 2019), met https://www.washingtonpost.com/technology/2019/01/18/us regulators - have - - - discuss - imposing - - privacy - its - some - facebook - . violations/ record - setting - fine - against 2 Complaint, Request for Investigation, Injunction, and Other Relief (Dec. 17, In the Matter of Facebook, - 2009), https://www.epic.org/privacy/inrefacebook/EPIC FacebookComplaint.pdf 3 Federal Trade Comm’n , Facebook Settles FTC Charges That It Deceived Consumers By Failing To Keep Privacy Promises (Nov. 29, 2019), https://www.ftc.gov/news - events/press - releases/2011/11/facebook - settles - ftc - charges - it - deceived - consumers - failing - keep . 4 Federal Trade Comm’n , Statement by the Acting Director of FTC’s Bureau of Consumer Protection Regarding Reported Con cerns about Facebook Privacy Practices (Mar. 26, 2018), - https://www.ftc.gov/news events/press - releases/2018/03/statement - acting - director - ftcs - bureau - consumer - protection . 5 According to the statement of the FTC Commissioners who testified before the Senate See, e.g., Commerce Committee in 2012: Similar to the Google order, the Commission’s consent order against Facebook prohibits the company from deceiving consumers with regard to privacy; requires it to obtain users’ affirmative express consent before sharing their information in a way that exce eds their privacy settings; and requires it to implement a comprehensive privacy program and obtain outside audits. In addition, Facebook must ensure that it will stop providing access to a user’s information after she deletes that information. The Need f or Privacy Protections: Perspectives from the Administration and the Federal Trade Commission : Hearing Before the S. Comm on Commerce, Science and Transportation , at 18, 112th Cong. (May 9, 2012) (statement of Fed. Trade Comm’n.), https://www.ftc.gov/sites - statement - federal - trade - /default/files/documents/public_statements/prepared - see and/120509privacyprotections.pdf; - administration - perspectives - protections need - privacy commission - US Consumer Privacy Organizations Federal Trade Commission 1 January 24, 2019 Remedies in Facebook Matter

2 But the record of repeated violations of the consent order can no longer be ignored. The company’s business practices have imposed enormous costs on the privacy and security of Americans, children and communities of color, and the health of democratic institutions in the United States and around the world. And we appreciate the statements that members of the present Commission have made regarding the need for strong and effecti ve enforcement. Chairman Simons told the Senate at his the FTC would prioritize the consumer protection issues “where harm is nomination hearing that 6 and in July he told the gest bang for taxpayer dollar, the greatest,” and that would garner the “big 7 As Commissioner Senat e that privacy and data security are n ow the top priority for the FTC. 8 Chopra has made clear, “FTC orders are not suggestions.” We note, for example, that under Section 5(l) of the FTC Act, the agency has very robust authority in seekin – both large fines and equitable relief -- g remedial action for violations of its prior orders. Given that Facebook’s violations are so numerous in scale, severe in nature, impactful for such a large portion of the American public and central to the compa ny’s business model, and given the company’s massive size and influence over American consumers, penalties and remedies that go far beyond the Commission’s recent actions are called for. 1) ubstantial Fines Impose S the personal Facebook has violated the consent involving order on numerous occasions, millions, possibly billions, of users of its services. Based on the duration of the violations, data of the scope of the violations, and the number of users impacted by the violations, we would expect th fine. previous at the fine in this case would be at least two orders of magnitude greater than any , The Need for Privacy Protections: also and the Federal Trade Commission, Hearing before the S. Comm. Perspectives from the Administration statement of Maureen K. on Commerce, Science, and Transportation, 112th Cong. (May 19, 2012) ( Ohlhausen, Commissioner, Fed. Trade Comm’n) (“We have also charged companies with failing to live up to their privacy promises, as in the highly publicized privacy cases against companies such as Google and Facebook, which together will protect the privacy of more than one billion users worldwide. As a g enforcement record.”), Commissioner, I will urge continuation of this stron - commissioner - maureen - https://www.ftc.gov/sites/default/files/documents/public_statements/statement See also Letter from FTC Chairwoman Edith Ramirez to V k.ohlhausen/120509privacytestimony.pdf. ra ě Jourov á , Commissioner for Justi ce, Consumers and Gender Equality, European Comm’n , at 4 - 5 (Jul. 7, 2016), https://www.privacyshield.gov/servlet/servlet.FileDownload?file=015t00000004q0v . 6 8, Hamza Shaban, Nominee for FTC chairman signals scrutiny for tech giants , Wash. Post., Feb. 14, 201 ftc - - signals chairman https://www.washingtonpost.com/news/the - switch/wp/2018/02/14/nominee - for - - scrutiny for - tech - giants/ . - 7 Statement of Fed. Trade Comm’n, Oversight of the Federal Trade Commission , before the Comm. on Energy and Commerce, Subcomm. on Digital Commerce and Consumer Protection, House of Representatives (July 18, 2018), (“Year after year, privacy and data security top the list of consumer protection priorities at the Federal Trade Comm ission.”) https://docs.house.gov/meetings/IF/IF17/20180718/108560/HHRG - 115 - IF17 - Wstate - SimonsJ - 20180718.pdf . 8 (May Repeat Offenders Commissioner Rohit Chopra memo to Commission Staff and Commissioners, /public_statements/1378225/chopra_ 18, 2018), https://www.ftc.gov/system/files/documents - 18.pdf - 14 - _repeat_offenders_memo_5 . 2 Federal Trade Commission US Consumer Privacy Organizations January 24, 2019 Remedies in Facebook Matter

3 but $ 2 2 million Thus, if the agency fined Google in the Safari hack, a significant matter at th anticipate violation of a preexisting order, we the fine against Facebook also a discrete This would be a much larger fine than the FTC has issued in the past billion. 2 would exceed $ but not inconsistent with the fines that large firms often face when found guilty of far - reaching 9 . f consumers practices that violate the rights o Such a penalty level is well within the agency’s scope of authority for violation of a - consent decree. Under the Section 5(l) of the FTC Act, as modified by subsequent inflation each a fine of more than $41,000. violation of an order may result in adjusting legislation, Focusing exclusively on the Cambridge Analytica scandal, Facebook has acknowledged that 10 more than 70 million Americans were likely affected. Even generously assuming that each affected person was subject to only one violation of the order, a thousand dollar fine per violation would necessitate a $70 billion fine. Our point is not to argue for a fine of this scale, but to underscore the authority the FTC possesses to impose consequential fines. 2) Establish Structural Remed i e s The evidence is also clear that Facebook breached its commitments to the Commission 11 occurred As this regarding the protection of WhatsApp user data. the initial consent order, after 12 p and Instagram. the FTC should require Facebook to unwind the acquisition of both WhatsAp The companies should be reestablished as independent entities and Facebook should be required personal to disgorge the data unlawfully acquired from those firms. This will also help restore competition and innovation for Internet messagin g and photo app services, two important goals for the future of the Internet economy . Facebook should also end the practice of collecting personal data from individuals who are not in fact users of the service. Information P ractices Require 3) Compliance with Fair urge the FTC to require Facebook to comply with Fair Information Practices for also e W 13 all s of personal data across all services for all companies . We have previously future use r Commission recommended that equire compliance with Fair Information Practices as a the 9 See, e.g., NPR, Wells Fargo Hit With $1 Billion In Fines Over Home And Auto Loan Abuses (Apr. 20, 2018), https://www.npr.org/sections/thetwo - way/2018/04/20/604279604/wells - fargo - hit - w ith - 1 - billion - . in fines - over - consumer - abuses - 10 Facebook, An Update on Our Plans to Restrict Data Access on Facebook (Apr. 4, 2018) , - https://newsroom.fb.com/news/2018/04/restricting access/ data - . 11 FTC Notifies Facebook, WhatsApp of Privacy Obligations in Light of Proposed Acquisition (Apr. FTC, https://www.ftc.gov/news facebook events/press - releases/2014/04/ftc - notifies - 10, 2014), - whatsapp - - proposed - - light - obligations ; Sheera Frenkel and Cade Metz, WhatsApp Co - Founder Leaving privacy Facebook Amid User Data Disputes , N.Y. Times (Apr. 30, 2018), https://www.nytimes.com/2018/04/30/technology/whatsapp facebook - jan - koum.html . - 12 See Tim Wu, The Curse of Bigness: Antitrust in the New Gilded Age 132 - 33 (2018) (discussing Facebook, WhatsApp, and Instagram, and the “clear dangers to democracy that stem from the manipulation of the Facebook conglomerate.”) 13 The Time is Now: A Framework for Comprehensive Privacy Protection and Digital Rights in the - digital framework.pdf - all - - for - rights . United States , https://www.citizen.org/sites/default/files/pri vacy - and 3 Federal Trade Commission US Consumer Privacy Organizations January 24, 2019 Remedies in Facebook Matter

4 14 FIP compliance must now be mandated Facebook should be condition of a privacy settlement. subject to ongoing compliance through enhanced annual edits, public reporting, and routine inspection by the F . TC Reform Hiring 4) and Management Practices Part of the problem with the company arises also from its failure to hire and maintain a diverse work force. The algorithmic bias of the news feed reflects a predominantly Anglo, male world view. The lack of language skills and cultural insensitivity have blinded Facebook to the “ ways in which its platform can be used to harm defenseless minorities. This has already played 15 out with deadly outcomes in Sri Lanka and Myanmar. ” Facebook could do far more to establish a company and a leadership team that reflec ts the broad diversity of its user base. And there should be independent directors who represent the interests of users and also examine the civil rights impacts of Facebook ’ s products and policies. If the company wishes “to connect the world,” it must als o be prepared to reflect the world in all m of its decision - aking. 5) Restore Democratic Governance The original complaint against Facebook grew out of the company’s failure to uphold its 16 commitments to democratic governance. After agreeing not to m ake changes to user privacy settings and other significant policy changes, the company ended user input and shut down news 17 groups that provided users with the opportunity to discuss the company’s business practices. We have lived with the consequences. 14 See, e.g., EPIC, Comments to the FTC, In the Matter of Snapchat, Inc ., FTC File No. 132 3078 (June 9, 2014) (“ The Commission Should Require Snapchat to Implement the Fair Information Practices Outlined in the Consumer Privacy Bill of Rights,”) https://epic.org/privacy/ftc/FTC - Snapchat - Cmts.pdf; . “FTC File No. 092 3184” (Dec. See also Comments on EPIC to the FTC, In the Matter of Facebook, Inc FINAL.pdf. - Comments - Settlement - FTC - 27, 2011), https://epic.org/privacy/facebook/Faceboo k 15 I Mentored Mark Zuckerberg. I Loved Facebook. But I Can't Stay Silent About Roger McNamee, (Jan. 17, 2019), http://time.com/5505441/mark - - mentor - facebook - downfall/ What's Happening zuckerberg 16 There is a longer history of significant events concerning the efforts of Facebook users to establish democratic accountability for Facebook during the 2008 - 2009 period. The filing of the 2009 complaint came about after it became clear that Facebook would not uphold its commitments to the Statement of Right and Responsibilities it had established. It would also be worth reconstructing the history of the “Facebook Users Aga inst the New Terms of Service” as Facebook destroyed the group and all records of its members and activities after the organizers helped lead a successful campaign against the company. Julius Harper was among the organizers of the campaign. A brief history was written by Ben Popken in “What Facebook's Users Want In The Next Terms Of Service,” 2009 for The Consumerist, - - want service/. Julius said - of - terms - next https://consumerist.com/2009/02/23/what the facebooks - users - - - in this in 2012: “Most people on Faceboo k don’t even know they can vote or even that a vote is going on. What is a democracy if you don’t know where the polling place is? Or that a vote is even being held? How can you participate? Ignorance becomes a tool that can be used to disenfranchise peopl e.” Facebook upsets some by seeking to take away users’ voting rights , San Jose Mercury News, Nov. 30, 2012, - users - away - - https://www.mercurynews.com/2012/11/30/facebook take upsets - some - by - seeking - to - - rights/. voting 17 , N.Y. Times (Feb. 18, 2009), Withdraws Changes in Data Use Facebook Brad Stone and Brian Stetler, https://www.nytimes.com/2009/02/19/technology/internet/19facebook.html, 4 Federal Trade Commission US Consumer Privacy Organizations January 24, 2019 Remedies in Facebook Matter

5 Commission to either restore the right of Facebook users to have meaningful We urge the or to recommend to Congress that s be regulated as a input into the company’s decision Facebook public utility. Facebook has operated for too long with too little democratic accountability. That should It should be for now end. At issue are not only the rights of consumers but also those of citizens. for and of the services users the future of Facebook. democratic institutions to determine We look forward to your final determination in the Facebook matter. Sincerely, Electronic Privacy Information Center Color of Change Co mmon Sense Media Constitutional Alliance Government Accountability Project Open Market Institute rivacy Times P Patient Privacy Rights Stop Online Violence Against Women Facebook takes a Democratic Turn (Feb. 27, 2009) at 1B USA Today , https://www.pressreader.com/usa/usa . edition/20090227/281887294213804 - us - today - 5 Federal Trade Commission US Consumer Privacy Organizations January 24, 2019 Remedies in Facebook Matter

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