Privacy Group Challenges Facebook’s Acquisition of WhatsApp

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Public interest advocacy group Electronic Privacy Information Center (EPIC) filed a complaint on Thursday with the U.S. Federal Trade Commission (FTC) opposing the recent $19 billion acquisition of messaging service WhatsApp by Facebook Inc. (NASDAQ: FB). EPIC claims that Facebook’s plans for incorporating WhatsApp data into its user profiling model violates WhatsApp’s users’ “understanding of their exposure to online advertising and constitutes an unfair and deceptive trade practice” that should be investigated by the FTC.

EPIC has had some success in limiting how and what information can be gathered and used by companies that make their money by targeted advertising. The FTC has ruled in favor of EPIC’s complaints about the now-defunct Google Buzz from Google Inc. (NASDAQ: GOOG) and the Passport program from Microsoft Corp. (NASDAQ: MSFT). EPIC also played a role in the 20-year consent decree agreement reached between Facebook and the FTC in 2012.

WhatsApp and Facebook have repeatedly said that WhatsApp’s no advertising, no data collection policies will be continued after the acquisition is completed. EPIC and others point to the example of Instagram, which had policies similar to those of WhatsApp until Instagram was incorporated into Facebook. In its complaint, EPIC notes, “Facebook has regularly collected user data from companies it acquires.”

EPIC also questions whether the acquisition of WhatsApp has implications for Facebook’s compliance with the Safe Harbor Framework, under which companies self-certify that privacy policies meet the framework’s standards. EPIC cites the investigation that led to the 20-year consent decree: “Facebook deceived consumers by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public.”

Here is what EPIC wants:

EPIC requests the Commission to:

  • Initiate an investigation of the proposed acquisition of WhatsApp by Facebook specifically with regard to the ability of Facebook to access WhatsApp’s store of user mobile phone numbers and metadata;
  • Until the issues identified in this Complaint are adequately resolved, use the Commission’s authority to review mergers to halt Facebook’s proposed acquisition of WhatsApp;
  • In the event that the acquisition proceeds, order Facebook to insulate WhatsApp users’ information from access by Facebook’s data collection practices; and
  • Provide such other relief as the Commission finds necessary and appropriate.

About the only way the FTC could give EPIC and other privacy advocates what they want would be to forbid absolutely any mixing of data from WhatsApp with Facebook’s own data. But that would essentially eliminate any reason for the acquisition to be completed. And that very likely will not be the side the FTC comes down on.

Facebook shares were trading down about 1.6% at the noon hour on Friday, at $69.72 in a 52-week range of $22.67 to $71.97.