FTC Report finds Social Media companies engaged in Vast Surveillance of users

A new Federal Trade Commission staff report examining the data practices of major social media and video streaming companies concludes that these firms have engaged in "vast surveillance" of consumers while failing to adequately protect users' privacy, especially for children and teens.

The report, released Thursday, is based on responses to orders sent in December 2020 to nine companies including Facebook (now Meta), YouTube, TikTok, Twitter, and Snap. It found that the companies collected troves of personal data about users and non-users alike, often retaining this information indefinitely. Many firms relied heavily on selling targeted advertising based on user data.

"The report lays out how social media and video streaming companies harvest an enormous amount of Americans' personal data and monetize it to the tune of billions of dollars a year," said FTC Chair Lina M. Khan in a statement. "While lucrative for the companies, these surveillance practices can endanger people's privacy, threaten their freedoms, and expose them to a host of harms, from identity theft to stalking."

Key findings of the report

• Many companies collected vast amounts of data about users' activities both on and off their platforms, including from data brokers.
• User data was often fed into automated systems and algorithms that made inferences about individuals' personal characteristics and interests.
• There was widespread use of tracking technologies like pixels that could transmit sensitive user information.
• Many firms failed to give users meaningful control over how their data was used by automated systems.
• Children and teens were not adequately protected, with teens often treated the same as adult users.

The report calls on Congress to pass comprehensive federal privacy legislation to address these issues. Recommended provisions include limits on data collection and retention, restrictions on targeted advertising, and stronger protections for teens.

However, advertising industry groups pushed back on the report's conclusions and recommendations.

Bob Liodice, CEO of the Association of National Advertisers, said the report "decides to tear down the entire house with sensationalist claims that the theoretical harms of data use outweigh all the staggering benefits of the digital economy." He argued that interest-based advertising funds free and low-cost digital services for millions of Americans.

Lou Mastria, CEO of the Digital Advertising Alliance, highlighted the success of industry self-regulation efforts like the AdChoices program. He said such programs have "provided ubiquitous real-time access to information and choices around interest-based advertising across millions of web pages and billions of ads."

Both industry leaders called for Congress to work with advertisers and self-regulatory bodies in developing any federal privacy legislation.

The debate sets the stage for potential battles in Congress over new privacy laws. With the FTC report providing ammunition for privacy advocates, but industry groups warning of economic consequences, lawmakers will have to weigh competing interests as they consider how to address data practices in the digital age.