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FTC's Conditions on Facebook-WhatsApp a 'Monument of Nothingness'

By Kimberly Koerth
April 14, 2014 - News

**Editor's Note: Please click here for a recap of the biggest channel-impacting mergers in Q1 2014.**

U.S. regulators have approved Facebook's $19 billion purchase of WhatsApp, but with a warning not to backtrack on commitments to user privacy. Specifically, the Federal Trade Commission emphasized that WhatsApp must stick to its promise not to use users' personal data for targeted ads.

Facebook generates most of its revenue by showing ads that target users by demographic traits such as age and gender, but WhatsApp has a unique policy not to collect usernames, email addresses or other contact information – only mobile phone numbers.

The FTC said in a letter to the two companies that they must obtain user consent if they use any data collected by WhatsApp in different ways than what they currently do. Facebook has to get user consent for some privacy changes after a 2011 settlement of charges that it forced consumers to share more personal information than intended. After the acquisition is complete, if the companies break their promises, they could both be in violation of the Federal Trade Commission Act, as well as the FTC order against Facebook.

“The letter from the consumer bureau at the FTC to Facebook and WhatsApp is a monument of nothingness," Yankee Group senior analyst Raul Castanon said, commenting specifically on a Reuters article. "The FTC’s Policy Statements on Deception and Unfairness clearly state that a trade practice is unfair if it ‘causes or is likely to cause substantial injury to consumers.’ The way to address privacy concerns is simply to not approve the deal. The letter does not address the larger issue of monopolistic practices, which should be the starting point. Placed under that light, it is just common sense that this situation could lead to unfair practices. If the FTC is simply going through the motions and doing this as a simple formality, it means we cannot take it too seriously; at least let’s call things by their name."

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