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The Federal Trade Commission's (FTC) order against Meta and the subsequent lawsuit by Meta highlights the limitations of fines as a deterrent for big tech companies. FTC Commission Chair Lina Khan stated that business models and incentives play a crucial role in shaping companies' data practices and that fines alone may not effectively address the issue. Khan mentioned that injunctions and consent decrees often lead to a repeat of the problem because firms with strong business incentives to collect user data continue to do so.
"As a general principle across our privacy work, which is now also informing our AI work, business models matter and the business incentives created by those business models matter," Khan said.
The new FTC order against Meta proposes restrictions on its use of facial recognition technology and a blanket prohibition on the monetization of kids' data. The FTC alleges that Meta violated a 2020 privacy order by deceiving parents about controls on interactions between kids and strangers on the Messenger Kids app, as well as providing app developers with greater access to private user data. Khan defended the FTC's more aggressive approach to regulating big tech, stating that fines can be treated by companies as a cost of doing business.
"We've seen historically firms do treat fines, even fines that sound really large - millions of dollars, even billions of dollars - they can sometimes treat those fines as a cost of doing business, if the underlying illegal tactics that they're engaging in are valuable enough to them," Khan said in the interview.