Facebook’s Plan for WhatsApp to Get Close Look from FTC

September 8, 2016, 1:59 PM UTC
Facebook founder and chief Mark Zuckerberg speaks at the so-called "Facebook Innovation Hub" in Berlin on February 25, 2016. Facebook announced it was donating computer servers to a number of research institutions across Europe, starting with Germany, to accelerate research efforts in artificial intelligence (AI) and machine learning. / AFP / dpa / Kay Nietfeld / Germany OUT (Photo credit should read KAY NIETFELD/AFP/Getty Images)
Photograph by Kay Nietfeld — AFP/Getty Images

When Facebook swallowed WhatsApp in 2014, CEO Mark Zuckerberg promised no one would mess with the popular messaging service’s strict privacy protections. But that was then.

Last month, the two companies had a change of heart as Facebook (FB) said it would slurp up user data, including phone numbers, that has till now been walled off in WhatsApp.

Such a shift was bound to draw the attention of regulators and, sure enough, the Federal Trade Commission has confirmed it is looking into the deal. In a letter to two privacy groups, the Center for Digital Democracy and the Electronic Privacy Information Center, the FTC says it will “carefully review” the complaint about the WhatsApp change.

The letter explains the agency is taking note of the groups’ two main objections: that Facebook’s plan to use the WhatsApp data is an “unfair and deceptive” trade practice, and that the plan violates the terms of a 2012 order related to an earlier privacy SNAFU involving Facebook. It also refers to WhatsApp’s earlier pledges about use of mobile phone numbers and other personal information.

All this his doesn’t mean necessarily mean, however, the agency will thwart Facebook’s plans for WhatsApp data—plans that will help the social network draw on WhatsApp’s more than one billion users to further ramp up its giant advertising machine.

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Instead, the FTC letter is more of a standard acknowledgement that the agency is paying attention. (The letter also notes the agency’s longstanding custom of neither confirming or denying an investigation is underway.)

Still, Facebook is in a delicate legal position given its early statements that it would take a hands-off approach to WhatsApp, and in light of a 2014 FTC letter advising the companies to make any change in policy clear to consumers.

The crux of the FTC’s analysis will likely turn on the notice that now appears when a consumer opens the WhatsApp app. That notice says a consumer must agree to Facebook’s new terms if they want to keep using WhatsApp. But, if a consumer clicks on a “learn more” link, they will see a button where they can opt out of most of the data sharing.

Will this be enough to withstand FTC scrutiny? On one hand, WhatsApp is making it pretty clear what’s afoot when it comes to the change in data policy. If consumers don’t like it, they can always choose another messaging app.

On the other hand, Facebook’s strategy of stashing the opt-out option on a different screen may raise the hackles of the FTC and prompt the agency to take action.

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