Do you ever wonder how you could be chatting with your friends on WhatsApp about going out for pizza and when you open Instagram, the first photo you see is of a restaurant advertising a buy one, get two pizza promotion?
Makes you wonder if Instagram was listening to your conversations on WhatsApp. This brings about privacy questions. How much do these social media apps we use know us? The things we talk about or even think about just popping on our screens out of the blue. Are they even out of the blue?
Because of these privacy concerns and targeted advertising, the Federal Trade Commission (FTC) is scrutinizing the practices of nine big technology companies that include retail giant Amazon (AMZN), social network giant Facebook (FB), Alphabet’s YouTube (GOOG) (GOOGL), and TikTok among others.
On Monday, December 14, 2020, the FTC, which has lawmakers from both the Republican and Democratic parties that include Democrat Rohit Chopra, Democrat Rebecca Kelly Slaughter, and Republican Christine Wilson voted 4-1 to order the above-mentioned companies, along with Reddit, Snapchat (SNAP), ByteDance’s TikTok, Discord, Twitter, (TWTR), and Facebook’s WhatsApp., to submit wide-ranging data on how they collect, use, and present personal information.
Furthermore, these companies are required to submit data to the commission about their advertising and user engagement practices, and their effect on children and teens.
The letter from the FTC reads in part:
“Despite their central role in our daily lives, the decisions that prominent online platforms make regarding consumers and consumer data remain shrouded in secrecy.
Critical questions about business models, algorithms, and data collection and use have gone unanswered. Policymakers and the public are in the dark about what social media and video streaming services do to capture and sell users’ data and attention. It is alarming that we still know so little about companies that know so much about us.”
Precisely, the FTC wants information about how these social media and video streaming services collect, use, track, estimate, or derive personal and demographic information about users and how they (the companies) determine which ads and content consumers see.
The Commission also wants to know whether the companies apply algorithms or data analytics to personal information and the impact of such efforts.
These big tech companies are required to divulge details of how they use demographic information like age, country, and race they collect from users. The FTC asked them to share the inputs and methodology for assessing their services’ reach, as well as to identify the top 1,000 most populous attributes that make a user valuable to their platform.
Spokespersons from some of these companies like Twitter, Reddit, and Discord have already expressed their willingness to work with the FTC and submit all the required information, for they “understand the privacy concerns” and they “take them very seriously.”
“Importantly, there are no ads on Discord. We make no money from advertising, selling user data to advertisers, or sharing users’ personal information with others. Instead, the company generates its revenue directly from users through a paid subscription service called Nitro,” a spokesperson from Discord said in an email to Yahoo Finance.
Over week go, the FTC and a group of 46 States except for Washington, D.C. and Guam. Alabama, Georgia, South Carolina, and South Dakota filed antitrust lawsuits against Facebook accusing it of operating an illegal monopoly.
The lawsuit says that Facebook used its big financial muscle to fend off competition by buying off competitors and depriving consumers of alternatives that would better protect their privacy.
The basis of this lawsuit is Facebook’s acquisitions of photo-sharing app Instagram in 2012 for $1 billion and messaging app WhatsApp in 2014 for $19 billion, as well as other smaller technology companies. The FTC is asking the court to force Facebook to sell off Instagram and WhatsApp.
Jennifer Newstead, Facebook’s General Counsel called the FTC’s lawsuit “revisionist history.”
The nine companies have 45 days from the date they receive the request to file a responsive report that includes the information requested.