Facebook fined US$11M for deceiving users

Italy’s competition regulator has fined Facebook US$11 million for its “aggressive” business practices, pre-selected functions, and a mammoth data breach.

The Italian Competition Authority (ICA) launched an investigation in April into alleged violations of the Consumer Code by Facebook Ireland Ltd. and its parent company, Facebook Inc. The deep dive wrapped up on November 29 and now Facebook is being forced to pay up.

The ICA found Facebook to have violated four of the Consumer Code articles (21, 22, 24 and 25). Facebook did this by claiming the service to be “free” for users all whilst not disclaiming how the company earns revenue from user data.

ICA’s statement, released Friday, said Facebook fails to be transparent about its use of data:

Facebook emphasizes the free nature of the service but not the commercial objectives that underlie the provision of the social network service, thus inducing users into making a transactional decision that they would not have taken otherwise (i.e., to register in the social network and to continue using it).

The information provided is in fact general and incomplete and does not adequately make a distinction between the use of data to personalize the service (in order to connect “consumer” users with each other) and the use of data to carry out advertising campaigns aimed at specific targets.

What’s more, Facebook has been failing to failure to offer users “prior consent” to their data being used.

Thanks to Facebook pre-selecting the “Active Platform” function, which pre-sets the users’ ability to access websites and external apps using their accounts, it “unconsciously and automatically” gives user data to third-party websites and apps for commercial purposes.

“The undue influence is caused by the pre-selection by Facebook of the broadest consent to data sharing,” said the ICA. “When users decide to limit their consent, they are faced with significant restrictions on the use of the social network and third-party websites/apps, which induce users to maintain the pre-selected choice.”

Source: Italian Competition Authority Facebook

The ICA has also ordered Facebook to publish an apology on its site and on its app.

It should be stated here that the fine covers users in Italy only. The dodgy practises that caused the investigation are likely running rampant in most other territories, including Australia and New Zealand.

So just what kind of ramifications does the fine have on the social network giant?

Granted, Facebook will again lose even more trust from its users (Cambridge Analytica anyone?), but Facebook’s bank account won’t really take a hit.

Zuckerburg’s net worth is around US$74 billion (according to Forbes), which means he makes just under US$6 million per day from Facebook’s 1.4 billion daily users

Reddit commenters may have put it best when they said:

Reddit comments in the thread /technews

Perhaps the most worrying outcome for Facebook is the knock-on effect the fine is sure to have.

According to The Guardian, other regulators in Ireland and California have been looking into Facebook’s practices.

In fact, the Irish Data Protection Commission launched a formal investigation into a Facebook data breach from September, which affected nearly 50 million accounts.

Reports suggest that investigation could result in a fine of up to US$1.63 billion.

This article originally appeared on The Industry Observer, which is now part of The Music Network.