Facebook Latest Updates Violate Section 5 of FTC Act

7/30/2019 Facebook Latest Updates Violate Section 5 of FTC Act

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FacebooksNewPrivacyChangesViolateSection5oftheFTCAct

AmirZonoziGeorgetownUniversity

Communication,Culture&TechnologyProgramMarketing,Advertising&PublicPolicy

Prof.AdonisHoffman,Esq.Fall2012


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FacebookViolatesFTC|Zonozi

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Introduction

AsofSeptember2012,Facebookannouncedithasover1billionusers.Thesocial

networkingservicethatlaunchedin2004hasstatedtheirmissionistomakethe

worldmoreopenandconnected,andwhiletheyarecertainlyaccomplishingthat,it

isimportanttoaskbutatwhatcost?

IarguethatFacebooksproposedupdatesinSiteGovernance,DataUsePolicy,and

StatementofRightsareconsideredinviolationofSection5oftheFTCActandare

consideredunfairpractices.

Facebook

Facebookistheworldslargestsocialnetworkingservice,withover1billionusers.

MarkZuckerbergfoundedFacebookin2004alongwithEduardoSaverin,Dustin

Moskovitz,AndrewMcCollumandChrisHugeswhileatHarvardUniversity.The

companyisnowarguablyoneofthemostimportantandpowerfulwebsitesonthe

Internet,settingtheindustrystandardforsocialmedianetworkinguserrightsand

responsibilities.Facebookwentpublicin2012andhadavaluationofabout$100

billion,makingitoneofthelargesttechIPOsinhistory1.Facebookrecentlymadea

settlementwiththeFederalTradeCommission(FTC)inNovember20112requiring

1http://mashable.com/category/facebook-ipo/2http://allfacebook.com/facebook-ftc-privacy_b68550


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Facebooktowarnconsumersaboutprivacychangesandtogettheirpermission

beforesharinginformationmorebroadly.Facebookagreedbytakingseveral

measuretopromotemoreprivacycontrolsandaopenandtransparentsystemwith

whatFacebookdoeswithuserdataandinformation.

FTC

TheFTChastwoprimaryfunctions;one,topreservecompetitionintradeand

commerce,andtwo,toprotectconsumersfromunfairanddeceptivetradepractices.

Facebooksprivacypolicyissuesfallunderthesecondprimaryfunction,consumer

protection.TheFTCenforcesconsumerprotectioninthreeways;one,clearmandate

toprotectconsumersagainstunfair,deceptive,fraudulentpractices;two,enforces

consumerprotectionlawspassedbyCongress;andthree,enforcestraderegulation

rulesissuedbycommission.TheFTCisgrantedthisstatutoryauthoritythroughthe

FTCAct,(15USC43etseq.)broadpowerswhichincludegathering,andcompiling

informationtoinvestigatefromtimetotimeorganizations,business,conduct,

practicesandmanagementengagedinorwhosebusinessaffectscommerce.Thisis

whytheFTC


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FactualOverview

OnNovember21,20123ElliotSchrage,VicePresidentofCommunications,Public

PolicyandMarketingatFacebookannouncedproposedchangestoFacebooksData

UsePolicyandStatementofRights(SRR).Theproposedrestructureaffected:the

sitegovernanceprocessandtoolsforprivacy.Theseproposedupdatedcaused

greatconcernformanyFacebookusers.Facebook

ProposedChanges

OnDecember3,2012Facebookrespondedandofferedusersachancetovoteon

theseproposedupdates,withresultsadvisoryunlessmorethan30%ofusersvote.4

Theyalsoincludedmoreinformationonthechangesandonaffiliates,content

ownershipandadvertisingpolicies.

Thesitegovernanceprocesschangesproposed,abolishesthevotingmechanism

grantedtousersallowingthemtheopportunitytoshapepolicieswithfeedback

throughvoting,andreplacingitwithafacilitateddirectdiscussionwiththeChief

PrivacyOfficer.TheaffiliateinformationexplainstoFacebookuserswhichaffiliates

Facebookissharingdatatheirwith.Facebooknewupdatesinprivacycontrols

providemoreclarityandin-contexteducation,theyalsoclarifyandconfirmusers3http://newsroom.fb.com/News/535/Proposed-Updates-to-our-Governing-Documents4https://www.facebook.com/notes/facebook-site-governance/our-site-governance-vote/10152304778295301


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haveownershipovertheirowncontent,andmadeclearontheiradvertising

policies.

TheVote

OnDecember11,2012,ElliotSchrage,VicePresidentofCommunications,Public

PolicyandMarketingatFacebookannouncedsocialnetworkhasconcludedits

seven-daysitegovernancevoteonproposedupdatestotheStatementofRightsand

ResponsibilitiesandDataUsePolicy.Atotalof668,872usersvoted,with589,141

votingagainsttheproposedupdates5,howeverwithonebillionusers,theresults

weresignificantlylessthan30%ofFacebookusers.Facebookusedtheminimal

participationasmorereasontoimplementitsproposedchangesinsitegovernance.

Changes

OnDecember12,2012Facebookreviseditsprivacypolicy6withupdatestotheir

StatementofRightsandResponsibilities(SRR)andDataUsePolicy.Facebooks

attemptwiththechangesistohelpusersbetterunderstandandmanagetheir

activityandcontentbyprovidingthemwithsimplepowerfultools.Facebookmade

threeupdatesinthreecategoriesofproductfeatures:control,educationandtools.

5https://www.facebook.com/notes/facebook-site-governance/our-site-governance-vote/101523047782953016http://newsroom.fb.com/News/547/Better-Controls-for-Managing-Your-Content


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Control

ThePrivacyShortcutsisthemostdisruptiveupdatedfeature,providingusersdirect

accesstotheirprivacysettingsonthetopoftheirFacebooktoolbar7locatedon

everypage,asopposedtoaccessingitundersettings.Theshortcutswillallowusers

tomanagewhoisavailabletocontactthemandwhocanviewtheirphotosand

timelineposts.Thiswillalsogivesuserstheabilityblockspecificpeopleeasily.

Facebookhasrevampedhowitallowsapplicationstoaskforyourdata,bymaking

clearpermissionsandcontrolforuserstobeeducatedonwhatdatatheyare

makingaccessiblewithup-frontprivacysettings,allowingusersanall-or-nothing

controloftheirshareddatatothirdparties.

Education

Facebookhasaddedin-contextnotices8throughoutthesocialnetworktohelpusers

comprehendthestatusoftheircontent.FacebookhasalsoupdateditsActivityLog9,

adesignatedlocationwhereuserscanreviewandmanagetheirFacebookcontent.

ThisallowsuserstodownloadtheirFacebookdatawhileprovidinga

7http://newsroom.fb.com/News/547/Better-Controls-for-Managing-Your-Content8http://newsroom.fb.com/News/547/Better-Controls-for-Managing-Your-Content9http://newsroom.fb.com/Safety-and-Privacy


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comprehensiveoutlookoftheirFacebookactivitywithfiltrationfunctionalityto

alloweasyaccesstospecificcontent.

Tools

FacebookhasalsointroducedupdatestoRequestandRemoval,designedtohelp

streamlinetheprocessbygettinguserstoengageinconversationswithintheir

networktoremovecontenttheydontwantorlikeonFacebook.Userswillbeable

todetagphotosandsendprivatemessagestoauthorexplainingwhyyoudetagged

thephotoand/orprovidereasonswhyyouwouldlikethephotoremovedfrom

Facebook.

MoreFeatures

OnDecember3,2012FacebookhasrolledoutanewPhotoSync10optiontousers,a

settingthatwillautomaticallyuploadeveryimagetakenwithamobiledevicetothe

socialnetworksdataservers.

IssuesPresented

WhileFacebooksrecentupdateshavepresentedwelcomedchangestoprivacy

control,theyhavealsointroducednewcriticalalterationsthatnegatetheir

advancementinuserrights.Changesincluderemovalofanoptionthatallowed

10https://www.facebook.com/help/photosync


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userstobehiddenfromstrangersthroughFacebookssearchfunction.The

Facebookprivacyteambelievesthisfeaturehasbecomemoreacrutchthana

securitytoolanddonotbelieveitprovidesalevelofsecurity11.Facebookis

enforcingthatbytakingawaytheabilitytoblocksearches,itshiftsthe

responsibilityofkeepingusersinformationprivatetousers12.Facebooksremoval

ofamastersettingmaybeoverwhelmingtosomeusersmakingthem

uncomfortablebyforcingthemtointeractwithincreasedoptionsofprivacy

settings.

ThechangesFacebookapprovedcomeafteravoteinwhich88%ofvotersopposed

changingtheprivacypolicyandabolishmentofvotingrights.While589,141

Facebookusersparticipated,makingthisvoteFacebookslargestvoterturnoutinits

history,howeversincelessthan30%participationoftotalFacebookusers(1

billion)participated,thevotecarriesnoweight.

FacebooksettledwiththeU.S.FederalTradeCommissiontoresolvechargesthatthe

companymadepublicsomepersonalinformationofusersafterinformingusersthat

datawouldbekeptprivate.ThesettlementrequiresFacebooktogiveconsumers

clearandprominentnoticeandobtaintheirexpressconsentbeforesharing

11http://news.cnet.com/8301-1023_3-57558642-93/facebook-privacy-settings-get-reworked-once-again/?ttag=fbwp12http://news.cnet.com/8301-1023_3-57558642-93/facebook-privacy-settings-get-reworked-once-again/?ttag=fbwp


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informationbeyondtheirprivacysettings13.TheFTCalsorequiresFacebookto

maintainacomprehensivepiracyprogramtoprotectconsumersinformationand

obtainprivacyauditsfromanindependentthirdparty14.

TrendsofPrivacyDisregard

TofurtherproveapointofFacebooksgrowingviolationsofprivacy;Facebookhas

alsorolledoutanewPhotoSyncoptiontousers,asettingthatwillautomatically

uploadeveryimagetakenwithamobiledevicetothesocialnetworksdata

servers15.RecentfiguresestimateFacebooksmobileappisusedby200million

peopleeachmonth,with300millionimagesuploadedtoserverseveryday16.Ifa

FacebookuserhasenabledthePhotoSyncservice,yetchoosestokeepallimages

private,Facebookcanstillusetheimagesgeolocationontheimagecontentto

locatewhereusersarebasedonwheretheimagewastaken17.Thisdatacanbe

usedtoconnectpeoplewithwheretheyhavebeenandwhotheyhavebeenwith,

theissuesariseswhencandidphotosaretakenwithoutapersonsknowledge,those

photosareautomaticallyuploadedtoFacebooksserverswithoutthepersons

permission.Whilethepersoncanhavethephotoerasedoffasmartphone,the

13http://ftc.gov/opa/2012/08/facebook.shtm

14http://ftc.gov/opa/2012/08/facebook.shtm15https://www.facebook.com/help/photosync16http://rt.com/usa/news/facebook-mobile-privacy-sync-187/17http://rt.com/usa/news/facebook-mobile-privacy-sync-187/


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photoremainsonFacebooksservers,strippingusersofanycontroloverthat

content.

PolicyAnalysis&Discussion

ThePrimaryConsumerProtectionStatuteprovidesconsumersprotectionunderthe

Section5(a)FTCAct.Thematterinquestionis,doesFacebookviolateSection5of

theFTCAct?Yes,FacebooksproposedupdatesinSiteGovernance,DataUsePolicy,

andStatementofRightsareconsideredinviolationofSection5oftheFTCActand

areconsideredunfairpractices.

TheproposedchangesraiseprivacyrisksforFacebookusersthatarecontraryto

commitmentspreviouslymadetotheusers18andtheFTCspreviousnegotiated

settlementwithFacebook19.Thecompleteabolishmentofthevotingsystemasa

methodofsitegovernance,conflictswithFacebooksstanceonopennessand

transparency.

Facebookalsocontradicteditspreviousstanceontheirpurchaseofthephoto-

sharingmobileapplicationInstagram.Originallyclaimingtheywouldgrow

InstagramandFacebookindependently,howeverundertheproposedchanges

18https://blog.facebook.com/blog.php?post=1015037870193713119http://www.ftc.gov/os/caselist/0923184/index.shtm


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undertheDataUsePolicy20,Facebookstatesitwilluseandsharedatawith

Instagramasanaffiliate.Facebookissettinganunhealthyhabitandpatternof

contradictingitselfanddisregardingthepublicanditsusers,withcontinuous

engagementinfraudulentpractice.

Facebooksremovalofanopt-outsearchpolicyengagesFacebookin

misrepresentationofprivacy,subjectinguserstouncomfortableadvancements

fromstrangers,spamandunwantedcontact.

Recommendations

ItismyrecommendationtheFTCprovidesadministrativeproceedingswiththe

threatofjudicialenforcementthroughadjudication.TheFTChasreasontobelieve

violationsinunfairpracticescanleadtoanegotiationinanupdatedsettlement

(consentdecree)betweenFacebookandtheFTCoverusersprivacyrightswiththe

threatsofpaymentfordamagesandaceaseanddesist.Thegoalofthisistoremedy

privacyviolationsforusersindustry-wideonallsocialmedianetworksbysettinga

standardwithFacebook.

ItismyrecommendationFacebookreturnstoitscommitmentoftransparencywith

informationstoredandcontrolonprivacyandretainsitssitegovernancepolicy

20https://www.facebook.com/full_data_use_policy


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withadaptations.Facebookspreviousvotingprocess21wouldbeginwitha

proposedchangebyFacebook,ifthepostreceivedover7,000comments,thepost

willbesubjectedtoa10dayvote,if30%ofFacebooksaudiencevotes,theresults

willbeinstated.Iflessthan7,000commentsweremade,orifthevotereceivedless

than30%ofFacebookspopulation,thenFacebookmovesforwardwithproposed

changes.TheissueliesinthatFacebooksprocesswastoodifficult,30%ofabillion

istoolargeofanumber.Achieving300millionvotes,questionswhetherthissystem

isreallyademocracy,orjustafaadeofone.

Myrecommendationisthatthevoteshouldbebasedontheparticipationbythose

thatvoteasthetotalaudience,thiswaythosethatengagehavevestedinterestsin

theiropinionandfeelstronglyaboutthewaytheyvote.Asanexamplethevoteover

sitegovernancewasthelargestvoteinFacebookshistory,yetitstillcouldnotreach

30%,andanoverwhelming88%22votedagainsttheproposedchanges.Asystem

thatignores88%ofitsuseropinionsisobviouslyflawedandthereneedstobe

somerectification.

21https://www.facebook.com/fbsitegovernance22http://techcrunch.com/2012/12/09/vote-on-facebook-changes/


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Conclusion

OnNovember21,2012FacebookannouncedupdatesandchangestoitsSite

Governance,DataUsePolicy,andStatementofRights,changesitsprivacycontrols

andsettingsofitsusers.Whilesomechanges,likein-contexteducationand

affiliationtransparencyandinformationarewelcomed,Facebookalsocontradicts

itscommitmentstoitsusersandtheFTCwithremovingopt-outpoliciesfrom

searchandmessaging,facilitatingunwantedcontactfromstrangers,abolishinga

systemwhereusersfeedbackcouldbeeffectivelyimplementedandcreatednew

featuresthatposeforliabilityandriskofprivacyandsafety.

IargueFacebookschangesareastepbackwardsinitscommitmentsof

transparencyandprovidingbetterprivacycontrolstoitsusers,engaginginunfair

practices,violatingSection5oftheFTCAct.IrecommendFacebookretractsits

proposedchangesandreinstateitssitegovernancevotingprocess,withamended

rulesinhowproposedupdatesarepassedandvotedon.IproposeFacebookchange

itsrequirementof30%totalFacebookuserparticipationasarequirementand

insteadusetheaudiencethatvotesasitis,andsubjecttheproposalscompletely

basedonthevotegivenbythataudience.Thiswouldrectifyinstancessuchasthe

lastvotetakeninthat88%oftheaudienceopposedthechange,yetFacebookstill

approvedtheproposalbasedonitspreviouslyinstatedbylaws.


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IalsorecommendedifFacebookrefusestonegotiatethattheFTCshouldthreaten

Facebookwithviolationfinesandsubjectthemtoajudicialprocess,inthatthey

violatedtheirpreviouslyagreedsettlement,andengagedinunfairpracticesthat

positionsthemcontrarytolawandinviolationofSection5ofTheFTCAct.