On Monday, the U.S. Federal Trade Commission (FTC) indicated that they had initiated a private and open investigation into the privacy policies of Internet giant Facebook.
It is being reported that the regulatory agency is actively looking into whether Facebook is in violation of a FTC consent degree from 2011 because of the way they handled the private information of more than 50 million of its users. This handling allowed an app creator to obtain the user data, which it then transferred to a data analytics company named Cambridge Analytica. The company, in turn, used the data to help run Donald Trump’s presidential campaign back in 2016.
Just last week, the FTC refused to say whether or not they were investigating the matter. But they have now acknowledged it.
Tom Pahl, who is the director of the agency’s Bureau of Consumer Protection, said on Monday in a statement that his agency has been very concerned about the reports that have been circulating in the media relating to the privacy policies of Facebook. He then went on to confirm that the agency is conducting an open but private investigation of Facebook’s privacy policies.
In the aftermath of the FTC announcement, Facebook’s stock fell precipitously. It was down as much as 6% on Monday, and is currently selling for a little less than $145, which is 20% lower than its 52-week high.
The 2011 consent degree established by the FTC requires companies such as Facebook to inform users before they share any personal information that goes beyond what the users have already agreed to publicly share. Consumers searching the web are already bombarded with marketing schemes that have their information tracked, and now even more personal information is being sold. Companies must also get permission from users before sharing this information. According to the decree, any violations of it can result in large penalties.
Pahl further said that his agency is committed to using all means at its disposal to protect the privacy of American consumers. This, he said, especially includes taking action against companies that do not keep the promises they made regarding user privacy.
Cambridge Analytica, while technically British, is owned in part by Robert Mercer, who is an America hedge fund manager who has been known to support conservative political causes. In addition to Donald Trump’s presidential campaign, the company has also worked for Texas senator Ted Cruz’s presidential campaign, and for dozens of other American political campaigns.
The company obtained the Facebook data through an app called ThisIsYourDigitalLife, which was created by a developer independent of the company. About 270,000 Facebook users shared personal data with the app, which gave the app permission to collect data on the friends of these users, which led to the compromising of 50 million Facebook users. The app developer violated Facebook’s Terms of Service by giving collected user information to Cambridge Analytica.
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