A recent ruling by a federal judge has cleared the way for the Federal Trade Commission (FTC) to propose new rules aimed at limiting how the social media giant Meta, the parent company of Instagram, can monetize user data. The decision by District Judge Timothy Kelly will allow the FTC to move forward with a proposal that would prevent Meta from profiting off the data it collects from users under the age of 18.
The Impact on Meta’s Business
If these restrictions are approved, they could have a significant impact on Meta’s data-driven business model, especially as they seek to engage younger users and expand into new areas like virtual reality. Additionally, the FTC has suggested imposing tougher rules on Meta’s use of facial recognition technology and requiring third-party audits to ensure compliance with privacy obligations before any new products or services can be rolled out.
This set of potential restrictions represents some of the most significant constraints on Meta’s operations since the privacy order in 2020, which resolved a federal investigation into the company’s handling of the Cambridge Analytica data scandal. In contrast, lawmakers in the US Congress have struggled to reach a consensus on legislation addressing concerns about teen mental health and privacy issues related to Meta.
Meta’s Response and Next Steps
Meta plans to appeal Judge Kelly’s decision to the US Court of Appeals for the DC Circuit. In a statement, a Meta spokesperson argued that the decision does not address the merit of the FTC’s allegations, which the company believes are baseless. They also highlighted their significant investment in privacy programs and tools to support user wellbeing.
Despite Meta’s appeal, industry analysts suggest that Judge Kelly’s decision is likely to be upheld. The FTC now has the authority to revise and expand the settlement without the need for court approval. However, Meta may still challenge any future rule changes in federal court.
It remains to be seen when the FTC will finalize its proposed rules, but experts anticipate it could happen as soon as spring 2024. In the meantime, the outcome of this battle between Meta and the FTC will have far-reaching implications for user privacy and the future of data-driven business models in the social media industry.
