The FTC Orders Major Social Media Companies to Reveal Data Collection Practices
In a landmark decision in December 2020, the Federal Trade Commission (FTC) issued orders to nine of the biggest social media and streaming companies in the world, including Twitch owner Amazon, Facebook (now Meta), YouTube, Reddit, WhatsApp, Twitter (now X), Snap, Discord, and TikTok’s ByteDance. The objective was to gain insights into how these tech giants collect and utilize their users’ personal information.
Following this directive, the FTC staff unveiled a detailed 129-page report on Thursday, highlighting the substantial amounts of personal data these companies collect and monetize to the tune of billions of dollars annually. FTC chair Lina M. Khan emphasized the potential privacy risks and threats posed by these surveillance practices, from identity theft to stalking.
Privacy Concerns and Data Monetization
The report specifically called out major social media companies for amassing large quantities of personal data and leveraging it in ways that may come as a surprise to users. The FTC discovered that these companies often purchase data from third-party brokers to gain insights into users’ demographics, interests, and online activities beyond the social media platforms.
This data forms the backbone of targeted advertising strategies, with a significant portion of companies’ revenues being generated through ad placements. Meta (formerly Facebook) reported that a staggering 98% of its revenue in a recent quarter came from Facebook and Instagram ads.
User Rights and Data Control
According to the FTC report, users face challenges in understanding how their personal information is collected and utilized for ad targeting purposes. Many users remain unaware of the extent of data gathering practices on social media platforms and lack meaningful control over the use of their personal information.
Companies heavily rely on user data to power algorithms, AI, and data analytics for content recommendations, search results, and advertising. The FTC urged companies to enhance transparency, prioritize privacy protection, and empower users to manage their data effectively.
Call for Comprehensive Privacy Legislation
The report also highlighted discrepancies in data deletion practices, with some platforms retaining de-identified data even after user requests for deletion. The FTC recommended stronger privacy safeguards and advocated for comprehensive federal privacy legislation to curb surveillance and safeguard consumers’ data rights.
As the conversation around data privacy and user control continues to evolve, it is crucial for tech companies to prioritize transparency, accountability, and user empowerment in their data practices.