Why is Meta suing the U.S. Federal Trade Commission? | Explainer Premium

Meta sued the U.S. FTC on November 29 in an effort to stop it from reopening a past privacy settlement where the social media company was ordered to pay $5 billion.

The story so far: Usually competition regulators investigate trade practices, sue corporations, and levy penalties on them. For instance, the U.S. Federal Trade Commission (FTC) probes antitrust practices and files lawsuits against tech companies it sees as violating consumer laws. But in a shock move, Facebook-parent Meta in late November sued the FTC, claiming the regulator was making an “obvious power grab” and that its action caused the social media giant “immediate and irreparable” harm.

Meta, the parent of Facebook, Instagram, WhatsApp, and Threads, sued the U.S. FTC on November 29 in an effort to stop it from reopening a past privacy settlement where the social media company was ordered to pay $5 billion to settle charges that it violated an older FTC order.

The privacy settlement, which was made in 2019, enforced broad privacy restrictions on Meta. The $5 billion penalty against Facebook was first announced in 2019 but is referred to as the 2020 privacy settlement. The FTC described it as “the largest ever imposed on any company for violating consumers’ privacy.”

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The FTC, in May, proposed changes to the three-year-old agreement, noting that Meta had not fully complied with the previous terms. The FTC also alleged that Meta misled parents about the Messenger Kids app and misrepresented how some app developers could access private user data.

As part of the latest changes proposed by the FTC, Meta would be barred from profiting off the data it collected from children (users below 18) as well as the data from its virtual reality products. Meta would also be restricted in its use of facial recognition technology, its launch of new products and features, and would have to provide even more user protections, as per the regulator.

Meta spokesperson Andy Stone shared a statement on May 3 on X (formerly Twitter), in which he called the FTC’s action a “political stunt” and claimed the regulator did not allow Meta to discuss the agreement.