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FTC Approves WhatsApp, Facebook Deal
FTC Approves WhatsApp, Facebook Deal

By Seth Fitzgerald
April 11, 2014 1:18PM

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Under the terms of the FTC's approval of Facebook's acquisition of WhatsApp, Facebook is required to keep WhatsApp's privacy policies intact unless users give their informed consent to any changes. If Facebook violates WhatsApp's privacy policies the FTC could levy fines or place other restrictions on the company.
 



One month after Facebook announced its plan to acquire WhatsApp for $19 billion, the Federal Trade Commission (FTC) has given its approval -- under one condition. WhatsApp’s privacy policies must remain the same unless consumers provide their informed consent.

The FTC made its ruling after privacy organizations in the U.S. wrote to the agency with concerns about exactly what Facebook planned to do with WhatsApp’s user data.

Facebook has not had a great record when it comes to protecting user information, as some people have argued that the social network exploits data for advertising purposes. As a result, even some of WhatsApp’s users were worried when the acquisition was announced, since WhatsApp has always tried to protect user privacy. Now that the FTC has made it clear that all changes require authorization, there is less potential for exploitation.

Enforcing The Law

As long as Facebook respects the privacy policy that WhatsApp has vowed to protect since the acquisition was first announced, the FTC will allow the deal to go through. Section 5 of the FTC Act already takes care of the exploitation of user data but since the two companies have completely different privacy policies, the government organization felt that it was necessary to reiterate what Facebook can and cannot do with WhatsApp.

Jessica Rich, the director of the FTC’s Department of Consumer Protection, wrote a letter to the legal counsels for both WhatsApp and Facebook informing them of the reasons user privacy must remain intact. In the letter, Rich referenced WhatsApp’s privacy policy as well as statements from both companies that have been released during the past month. She used those to show that Facebook has a legal and ethical requirement to respect WhatsApp’s policy and its users.

“WhatsApp must continue to honor these promises to consumers. Further, if the acquisition is completed and WhatsApp fails to honor these promises, both companies could be in violation of Section 5 of the Federal Trade Commission Act and, potentially, the FTC's order against Facebook," Rich said in the letter.

An Old Agreement

Not only are Facebook and WhatsApp subject to the laws in the FTC Act but they are also subject to an agreement that Facebook reached with the FTC in 2011. The regulatory authority filed a lawsuit against Facebook when it was discovered that the social network had not been upfront about how it was using user data.

At that time, Facebook was directly breaking promises that it had made with its users and was not informing them about policy changes. The two parties eventually agreed that Facebook would have to get approval from users before making changes to its terms of service.

Since WhatsApp will be under Facebook’s control, it must also operate in accordance with the FTC’s requirements. Failure to do so would cause Facebook to be in violation of multiple agreements, and the FTC would have an easy time levying fines or placing other restrictions on the company.
 

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