April 11, 2014
Facebook WhatsApp Acquisition Approved By FTC With Privacy Warning
Enid Burns for redOrbit.com - Your Universe Online
The Federal Trade Commission (FTC) has given its approval for Facebook to acquire WhatsApp for $19 billion. The regulator granted authorization with a warning that the FTC will be watching for privacy violations.
As the FTC cleared the way for Facebook to complete the acquisition, it also issued a letter, reports CNET. The letter, addressed to Facebook's chief privacy officer Erin Egan and WhatsApp's general counsel Anne Hoge and signed by Jessica Rich of the Bureau of Consumer Protection read more like a reprimand, according to CNET, than a regulatory approval issued by the FTC.
"As you know, both companies collect data from consumers but make different promises and statements with respect to consumers' privacy," the letter from Rich read. The concern is that WhatsApp states that it limits the amount of data it collects, maintains and shares with third parties. Facebook, on the other hand, shares its data more freely with third parties for the purposes of advertising and other practices.
"We want to make clear that, regardless of the acquisition, WhatsApp must continue to honor these promises to consumers," Rich wrote. If WhatsApp data are shared for Facebook purposes both companies could be found in violation of Section 5 of the Federal Trade Commission Act, the letter threatens.
The privacy concerns do not come from the FTC and the Bureau of Consumer Protection alone. Soon after Facebook and WhatsApp filed for regulatory approval from the FTC on the acquisition, two privacy groups filed a complaint with the FTC over concerns that the acquisition would open WhatsApp users up to new privacy issues.
WhatsApp may not voluntarily share user data such as names, locations and mobile address book data, however a security flaw identified by IT specialist Bas Bosschert revealed that hackers could access such details from WhatsApp data.
The Section 5 act refers to "unfair or deceptive acts or practices," CNET states. The act protects against practices that cause consumers substantial injury. "In addition, the 2011 order against Facebook bars the company and its properties from misrepresenting what it collects on members, and forces the social network to get member consent before sharing nonpublic information beyond their privacy settings," CNET's Van Grove wrote.
The letter to Facebook from the Bureau of Consumer Protection and the FTC concludes with a warning that the FTC will be watching Facebook and WhatsApp for any violations. "Hundreds of millions of users have entrusted their personal information to WhatsApp. The FTC staff will continue to monitor the companies' practices to ensure that Facebook and WhatsApp honor the promises they have made to those users," the letter said.
There are no details on how long Facebook will have to conform to the stipulation, or what happens of WhatsApp is absorbed into Facebook and becomes part of its messaging service.