The Federal Trade Commission issued an order just under four years ago mandating nine of the top social media and video streaming companies to give specific details about how they gather and utilize personal customer data.
Amazon, Facebook, and WhatsApp, as well as YouTube, Twitter, Snap, ByteDance, Reddit, and Discord, all received payments.
The FTC’s purpose was to learn more about how these firms utilize – and potentially misuse – consumer data, especially for targeted advertising and feeding their algorithms, with a particular emphasis on how their activities affect children and teens.
On Thursday, the commission released the results of its efforts, a more than 100-page staff report with the deceptively simple title “A Look Behind the Screens: Examining the Data Practices of Social Media and Video Streaming Services.”
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That may sound like a term paper, but it has bite. Although a staff report is not a law enforcement investigation, it is a clear indication of the commission’s ongoing priorities.
“I don’t think it takes a lot of detective work to connect the dots between the enforcement work we’ve been doing over the last few years and some of the problems we identified in this report,” a top FTC official told reporters on background during a press conference on Wednesday.
This is the business model.
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And the problems identified in the report are numerous: data hoarding, including information from data brokers; indefinite data retention policies; a lack of control or oversight for data handling; an insufficient approach to data minimization; a tendency not to fully comply with user data deletion requests; a reliance on “privacy-invasive tracking technologies, such as pixels”; using algorithms for analytics with no easy way for people to opt out – you get the picture.
However, according to the research, they all boil down to the same fundamental issue: these corporations are driven to acquire large amounts of user data for monetization because that is how they make the majority of their revenue.
The problem of “vast surveillance,” as described in the report, has less to do with any one product feature or characteristic of a service, according to an FTC official. It goes deeper than that.
“It’s the underlying business incentives – the behavioral advertising business model in particular,” the researchers claimed. “That business model is driving a lot of our concerns with targeting people based on sensitive characteristics, whether it’s where they go to church or what medical needs they have.”
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This viewpoint is reflected in multiple recent FTC enforcement cases targeting the misuse of sensitive consumer data, such as location and health information.
The kid’s question
However, every issue raised in the report is exacerbated when it comes to the gathering and use of data from children and adolescents.
The investigation discovered that social media and video streaming firms do not adequately protect the children who use their products – when they acknowledge that children use their products at all.
Many companies will claim that there are no children utilizing their platform since the service is not marketed to children and/or does not officially enable minors to create accounts. According to the article, this is an attempt to evade the Children’s Online Privacy Protection Act (COPPA) Rule, which applies to site owners and operators who have “actual knowledge” that they are collecting personal data from children under the age of 13.
And, according to the information supplied with the FTC in response to its mandate, social media and video streaming businesses often treat teens the same as their adult customers.
It wasn’t easy to get the platforms to disclose details about their data practices.
“It wasn’t exactly easy extracting information from these companies – even with the benefit of having civil investigative demand authority,” the spokesperson for the Federal Trade Commission said.
The ‘myth’ of notice and selection
Regular customers also have a difficult time obtaining the information they require to make educated privacy decisions.
Typically, they receive too much information, as anyone who has ever encountered a lengthy online privacy policy written in legalese (i.e., everyone who has ever accessed the internet) can attest.
This, the official explained, is the “fiction” of notice and choice.
“Consumers are expected to protect themselves online by reading privacy policies and clicking ‘I agree’ at the end,” according to them. “Real data protection is necessary. … “No one has time to read those policies, and choice is illusory in many of these markets.”
The FTC more than encourages
So what is the solution?
The FTC’s report makes several recommendations, including limiting data collection, enforcing a rational approach to data minimization and retention, deleting consumer data when it is no longer required, implementing consumer-friendly privacy policies that ordinary people can understand, and not collecting sensitive information through ad tech providers.
The report also urges on corporations to give customers greater choice over how their data is incorporated into automated systems, as well as to avoid neglecting youngsters who use their services.
“Pretending that there aren’t kids on the platform and burying one’s head in the sand is not going to get you out of COPPA liability,” stated a spokesperson for the FTC.
But there’s also a strong clamor for Congress to pass comprehensive privacy legislation.
Because self-regulation just “hasn’t worked,” the official explained.
“Two decades ago, many people said that the government should stay away from the internet…” That tech corporations should be trusted – this has not happened,” they stated. “[We] are probably the only country in the industrialized world, or one of them, that doesn’t have comprehensive privacy protections.” “This is the Wild West.”
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