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Privacy Groups Seek FTC Probe of WhatsApp Acquisition by Facebook

| March 6, 2014
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The Facebook and WhatsApp applications' icons are displayed on a smartphone on February 20, 2014. (Gabriel Bouys/AFP/Getty Images)

The Facebook and WhatsApp applications’ icons are displayed on a smartphone on Feb. 20, 2014. (Gabriel Bouys/AFP/Getty Images)

Two privacy groups have filed a formal complaint with the Federal Trade Commission over Facebook’s proposed $19 billion acquisition of WhatsApp, a popular mobile messaging service.

The Electronic Privacy Information Center and the Center for Digital Democracy, both based in Washington, D.C., want regulators to block the purchase of the Mountain View company until privacy concerns are worked out.

According to a story by Jessica Guynn in the Los Angeles Times, at issue is whether “Facebook will exploit reams of personal information of WhatsApp’s more than 450 million users to target advertising.” The piece notes that WhatsApp, which currently employs 55 people, had vowed to never run advertising on its site.

The complaint, filed Thursday, spells it out: “WhatsApp built a user base based on its commitment not to collect user data for advertising revenue. Acting in reliance on WhatsApp representations, Internet users provided detailed personal information to the company including private text to close friends. Facebook routinely makes use of user information for advertising purposes and has made clear that it intends to incorporate the data of Whats App users into the user profiling business model. The proposed acquisition will therefore violate WhatsApp users’ understanding of their exposure to online advertising and constitutes an unfair and deceptive trade practice, subject to investigation by the Federal Trade Commission.”

When WhatsApp announced its partnership with Facebook on Feb. 19, the almost 5-year-old company tried to reassure its fans in a blog post, saying: “Here’s what will change for you, our users: nothing.”

But it didn’t take long before people started worrying. On Feb. 25, the European Union’s top privacy regulator said the acquisition could unleash privacy probes all over the EU, driven by the determination to find out how massive amounts of client data could and would be used.

According to a recent Bloomberg story: “The biggest Internet acquisition in more than a decade may spur interest from authorities who so far ignored the emergence of WhatsApp, said Jacob Kohnstamm, who leads a group of EU privacy officials known as the Article 29 Data Protection Working Party as well as the Dutch agency already investigating the 450-million client company.”

Also, according to Bloomberg: Kohnstamm said in an interview that colleagues in other EU countries “could, having heard about the merger, decide to do research into the product as well” and as such “28 data protection regulators could open an investigation.”

CNET”s article about the FTC complaint included a response from Facebook and a bit of context on the commission:

Facebook responded with an e-mailed statement to CNET that said, “As we have said repeatedly, Whatsapp will operate as a separate company and will honor its commitments to privacy and security.”

The FTC did not respond to a request for comment. … It’s worth noting that until the FTC decides to respond, the complaint carries little legal weight. There has been no indication of how the FTC intends to respond at this point.

Historically, EPIC complaints to the FTC have not gone unheard, although there is much debate about the FTC’s effectiveness in regulating privacy. In addition to the aforementioned consent decree that Facebook must operate under, the FTC has taken action against Google Buzz, Facebook’s privacy settings changes, and Microsoft Passport. The FTC approved Google’s purchase of DoubleClick despite an EPIC complaint, however.

Slate reported that EPIC had noted favorable FTC responses to several of its past complaints.  “And generally speaking, mergers and acquisitions are reviewed for their effects on competition, not consumer privacy,” the Slate article said. “It would therefore be unusual for deal like this to be a blocked on privacy grounds.”

PCWorld’s story included comments from an EPIC lawyer: “WhatsApp users rely on WhatsApp to maintain the privacy of their communications,” Julia Horwitz, EPIC’s consumer protection counsel, said by email. “Our complaint urges the FTC to investigate whether there are sufficient privacy protections in place to continue to shield the data of WhatsApp users from access by Facebook—which (for many users) was the very feature that made WhatsApp so appealing in the first place.”

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About the Author ()

Pat Yollin has written about all kinds of stuff, including wayward penguins at the San Francisco Zoo, organ transplants, the comeback of the cream puff, New York on the fifth anniversary of 9/11, a Slow Food gathering in Italy and the microcredit movement in Northern California. Her favorite stories from last year were an interview with George Lucas at Skywalker Ranch, a profile of Italy's consul general in SF, and a pirate Trader Joe's operation in Vancouver that prompted the grocery chain to sue -- and lose. Reach Patricia Yollin at pyollin@kqed.org.

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