BizTech Law Blog
Facebook has reached a settlement with the Federal Trade Commission regarding charges that it violated users' privacy rights.
Why Facebook was under investigation?
In December 2009, privacy advocates filed a complaint with the FTC following certain changes to Facebook privacy policies. Specifically, the FTC complaint alleged that Facebook made aspects of its users' profiles - such as name, picture, and friends list - public by default and without user consent. The FTC stated that such actions violated user expectations of privacy and threatened the "health and safety" of users by exposing "potentially sensitive affiliations" such as political views and sexual orientation.
The FTC complaint also alleged other situations where Facebook "made promises that it did not keep," such as promising that it would not share information with advertisers or retain data that it promised users was deleted.
Terms of the Settlement?
The settlement requires that Facebook adopt a policy permitting users to "opt-in" whenever Facebook makes changes to its privacy policy and sharing option. If that policy had been in effect in 2009 when Facebook made the offending changes to its privacy policy, the social network would have been required to notify users and ask whether they agreed with making certain user information public.
Moreover, Facebook must block other users from accessing data from a deleted or deactivated account. Facebook must also allow independent privacy auditors to review its privacy practices for the next twenty (20) years.
As a practical matter, the settlement is likely an avenue for Facebook to appease regulators and Wall Street in anticipation of an expected 2012 IPO, which may net in excess of $100 Billion.
If you have any questions, please let me know.
Shareholder and Firm TreasurerNicholas focuses his practice in the areas of Michigan non-property tax disputes, business entity selection, corporate transactions, and information technology.
