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FTC orders Amazon, Facebook and others to explain how they collect and use personal data

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Key Points
  • The Federal Trade Commission is requiring nine tech companies to share information about how they collect and use data from their users, the agency announced Monday.
  • Amazon, TikTok owner ByteDance, Discord, Facebook and its subsidiary WhatsApp, Reddit, Snap, Twitter and Google-owned YouTube were each sent orders to hand over information about their data practices. The companies have 45 days to respond from the date they received the orders.
  • The FTC is using its authority under Section 6(b) of the FTC Act, which allows it to pursue broad studies separate from law enforcement.

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Federal Trade Commission (FTC) Chairman Joe Simon speaks during a press conference on September 4, 2019, at the FTC headquarters in Washington, DC. - Simons announced Google agreed to pay a $170 million fine to settle charges that it illegally collected and shared data from children on its YouTube video service without consent of parents. (Photo by Mandel Ngan / AFP) (Photo credit should read MANDEL NGAN/AFP/Getty Images)
MANDEL NGAN | AFP | Getty Images

The Federal Trade Commission is requiring nine tech companies to share information about how they collect and use data from their users, the agency announced Monday.

Amazon, TikTok owner ByteDance, Discord, Facebook and its subsidiary WhatsApp, Reddit, Snap, Twitter and Google-owned YouTube were each sent orders to hand over information about their data practices. The companies have 45 days to respond from the date they received the orders.

Along with details about how the services collect and use data, the agency is seeking information about how how they determine which ads to show their users, whether algorithms or data analytics are used on personal information, how they "measure promote, and research" engagement from users and how their data practices impact children and teens.

The FTC is using its authority under Section 6(b) of the FTC Act, which allows it to pursue broad studies separate from law enforcement. The agency launched a separate 6(b) study earlier this year to examine past acquisitions by Google parent Alphabet, Amazon, Apple, Facebook and Microsoft that would not have been subject to pre-reporting rules for mergers. Chairman Joe Simons said at the time that while a 6(b) study is not connected to an enforcement action, the merger review could "definitely could inform enforcement."

The FTC filed charges last week against Facebook alleging the company has unlawfully maintained a monopoly in personal social networking services. The lawsuit, filed alongside a separate complaint from a group of 48 states and territories, claims Facebook bought up nascent rivals like Instagram and WhatsApp that it feared would enter its core business area. The enforcers claim Facebook's actions have harmed consumers in part by diluting the quality of services available, including based on features like privacy. Facebook called the lawsuit "revisionist history" of its two major acquisitions which the FTC itself allowed to go through.

The commissioners voted to issue Monday's orders in a 4-1 vote with Republican Commissioner Noah Joshua Phillips dissenting. In a statement, Phillips wrote that while he appreciates the stated aim of the orders, he believes they are "instead an undisciplined foray into a wide variety of topics, some only tangentially related to the stated focus of this investigation."

Phillips added, "The breadth of the inquiry, the tangential relationship of its parts, and the dissimilarity of the recipients combine to render these orders unlikely to produce the kind of information the public needs, and certain to divert scarce Commission resources better directed elsewhere."

Three of the commissioners who voted in favor of the action said in a statement, "The FTC wants to understand how business models influence what Americans hear and see, with whom they talk, and what information they share... And the FTC wants to better understand the financial incentives of social media and video streaming services."

"We're working, as we always do, to ensure the FTC has the information it needs to understand how Twitter operates its services," a Twitter spokesperson said in a statement.

"Discord takes user privacy very seriously and we look forward to working with the FTC to answer their questions about our privacy practices," a spokesperson for the company said in a statement. "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."

"We are looking forward to working with the FTC and sharing with them our user privacy policies and practices," a Reddit spokesperson said in a statement.

The other companies named in the orders did not immediately respond to CNBC's requests for comment.

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