Meta Sues FTC to Prevent Reopening of Privacy Settlement and User Data Monetization Ban

Meta, the parent company of Instagram, has filed a lawsuit against the Federal Trade Commission (FTC) to prevent the reopening of the company's $5 billion privacy settlement in 2020 and to block regulators from prohibiting the monetization of user data for children. The lawsuit, filed in a Washington federal court, seeks to halt the FTC's proceeding, alleging that it constitutes an unconstitutional abuse of government power.

In the complaint, Meta argues that the FTC has acted as both prosecutor and judge, characterizing the proceeding as an "obvious power grab" resulting in an "unconstitutional adjudication by fiat." The legal action represents an escalation by Meta following a federal judge's decision allowing the FTC proceeding to move forward. Meta appealed that decision, and the new lawsuit expands the company's efforts to push back against regulatory actions.

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In May, the FTC imposed new restrictions on Meta's 2020 consent order, alleging new violations. The proposed terms include significant restrictions preventing Meta from monetizing the personal data of users under 18, limitations on the use of facial recognition, and a moratorium on new products and services unless a third-party audit verifies compliance with privacy obligations.

If approved, these restrictions could pose challenges to Meta's data-driven business model, particularly as it aims to attract younger users and expand into new product areas like virtual reality. The legal battle reflects ongoing tensions between technology companies and regulatory authorities over privacy practices and user protections.

Meta's lawsuit is part of a broader trend of legal challenges to the authority of independent federal agencies. The power of such agencies has faced increased scrutiny, with potential implications for their regulatory roles. The outcome of this legal dispute will likely have implications not only for Meta but also for the broader regulatory landscape governing technology companies and their responsibilities in safeguarding user data, especially that of minors.

As legal proceedings unfold, the case may contribute to shaping the boundaries of regulatory authority over major tech platforms, impacting how privacy and user protection issues are addressed in the evolving digital landscape.