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Facebook, WhatsApp deal hits roadblock as privacy groups file FTC complaint

Two privacy groups are asking the Federal Trade Commission to halt Facebook's acquisition of WhatsApp, alleging it constitutes an unfair and deceptive trade practice by violating the messaging app's users' understanding of their exposure to online advertising.

The Electronic Privacy Information Center and The Center for Digital Democracy are asking the FTC to investigate claims by Facebook and WhatsApp that the latter's user data will not be compromised. If the FTC launches an investigation and the companies are not insulating WhatsApp user data from Facebook, this could be a significant challenge to completing the deal, according to the privacy groups.

?The issue we present in the complaint is that WhatsApp users rely on WhatsApp to maintain the privacy of their communications,? said Julia Horwitz, consumer protection counsel at EPIC, Washington. ?Facebook has a proven record of collecting user data from companies that it acquires.

?So users are worrying about what happens to their data now that Facebook and WhatsApp have announced the deal,? she said.

?So the goal of our complaint is to urge the FTC to investigate whether there are sufficient privacy protections in place to continue to shield the data of WhatsApp users from access by Facebook, which for many users was the very feature that made WhatsApp so appealing in the first place.?

User profiles
The filing with the FTC follows the initiation of investigations in two European countries into the privacy implications of the proposed Facebook, WhatsApp deal.

The complaint asks the FTC to halt Facebook's proposed acquisition of WhatsApp until the privacy issues are resolved or, if the acquisition proceeds, to insulate WhatsApp users' information from access by Facebook.

Privacy advocates are concerned that by giving Facebook access to the millions of mobile phone numbers and addresses WhatsApp has collected, Facebook will be able to build complete profiles on its users.

WhatsApp's privacy policy states that it does not collect user data other than mobile phone numbers and that it does not use this information or personally identifiable information to send marketing messages without user consent.

The company's founder, Jan Koum, has also repeatedly stated that WhatsApp is not interested in selling user data.

After the Facebook acquisition was announced, Mr. Koum assured users on the company's blog that nothing would change.

A significant challenge
According to the complaint, part of the reason for WhatsApp significant success is that consumers have relied on these claims when providing detailed personal information.

In comparison, Facebook routinely makes use of user information to help it sell advertising.

The complaint also claims that Facebook has made it clear that it intends to incorporate the data of WhatsApp's users into its own user profiling strategy.

The social network has, in the past, incorporated data from companies it has acquired, according to the complaint.

For example, after Facebook acquired Instagram, it accessed users' data and changed the Instagram terms of service to reflect this change.

The complaint is the latest example of the growing concern over how mobile users? personal information is being used by apps, publishers, advertising companies and others.

?The FTC is the executive agency primarily responsible for defending user privacy,? Ms. Horwitz said. ?By filing this complaint, we hope that the FTC will use its legal authority to investigate whether the merger would be unfair or deceptive to WhatsApp users.

?An FTC investigation would be a significant challenge if the companies are not insulating WhatsApp user data from being commingled with Facebook data,? she said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York