The US Federal Trade Commission is launching an investigation into Facebook over its privacy practices after the private data of millions of Facebook users was obtained by the political consultancy firm Cambridge Analytics.
The FTC will examine whether Facebook engaged in “unfair acts” that caused “substantial injury” to consumers.
“The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers,” said Tom Pahl, the acting director of the commission’s Bureau of Consumer Protection, in a statement.
“Foremost among these tools is enforcement action against companies that fail to honor their privacy promises.
“… Accordingly, the FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook.”
Facebook has been criticized for allowing the consultancy firm to obtain data on up to 50 million users.
Cambridge Analytica reportedly used the information to help Donald Trump’s 2016 US presidential campaign.
The consultancy firm got the data through an app designed by Cambridge University researcher Aleksandr Kogan.
Facebook says Kogan “lied” to Facebook in 2015 and violated the company’s “Platform Policies” by passing data from a personality prediction app for Facebook users called “thisisyourdigitallife” to Cambridge Analytica and Strategic Communication Laboratories (SCL) – without informing users.
Christopher Wylie, who worked with Kogan to obtain the data, told the Observer: “We exploited Facebook to harvest millions of people’s profiles. And built models to exploit what we knew about them and target their inner demons. That was the basis the entire company was built on.”
By law, Facebook has an obligation to notify users and receive their permission for their data to be shared beyond their privacy settings in what’s known as the “consent decree”.
Former director of the FTC’s Bureau of Consumer Protection, David Vladeck, said that the penalty for each violation of the consent decree is $40,000.
Mr Vladeck told the Washington Post that if the data of 50 million people was compromised then Facebook could face fines running up to trillions of dollars.
Facebook insists that it did nothing wrong.
Rob Sherman, Facebook’s deputy chief privacy officer, said in a statement: “We remain strongly committed to protecting people’s information. We appreciate the opportunity to answer questions the FTC may have.”