FTC OKs Facebook+WhatsApp, warns against privacy violations

Facebook may have cleared a hurdle in its purchase of WhatsApp, but the FTC will be watching closely to keep the social networks honest.

Jennifer Van Grove Former Senior Writer / News
Jennifer Van Grove covered the social beat for CNET. She loves Boo the dog, CrossFit, and eating vegan. Her jokes are often in poor taste, but her articles are not.
Jennifer Van Grove
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The Facebook icon flag at the social network's Menlo Park, Calif., campus. Facebook

Facebook has received the blessing of the Federal Trade Commission and will move forward with its mammoth deal to purchase messaging app WhatsApp for $19 billion, CNET has confirmed. But the expected victory came with a letter that reads more like a reprimand.

Though the FTC cleared the deal, meaning its competitive review process is now complete, the organization Thursday sent a sharply worded letter to Facebook Chief Privacy Officer Erin Egan and WhatsApp General Counsel Anne Hoge reminding both companies that they will need to abide by the privacy promises they've made to consumers or face legal consequences.

"We want to make clear that, regardless of the acquisition, WhatsApp must continue to honor these promises to consumers," Bureau of Consumer Protection Director Jessica Rich wrote. "Further, if the acquisition is completed and WhatsApp fails to honor these promises, both companies could be in violation of Section 5 of the Federal Trade Commission (FTC) Act and, potentially, the FTC's order against Facebook."

In its privacy policy, WhatsApp asserts that it does not collect its users' names, locations, email addresses, or mobile address book data. Nor does the company sell or share users' phone numbers with third parties.

Immediately following news of the deal, Facebook CEO Mark Zuckerberg and WhatsApp CEO Jan Koum were adamant that WhatsApp's would stay the same, meaning it would maintain its very limited data collection practices under the social network's regime.

The chiefs will need to keep their promises -- or, alternatively, get users' consent to use their data -- should they wish to keep the peace with the government organization, which has had prior run-ins with Facebook over privacy matters.

"We're pleased the FTC has completed its review and cleared our acquisition of WhatsApp. Naturally, both companies will continue to comply with all applicable laws after the transaction closes," a Facebook spokeswoman told CNET.

The aforementioned Section 5 prohibits "unfair or deceptive acts or practices" that cause consumers substantial injury. In addition, the 2011 order against Facebook bars the company and its properties from misrepresenting what it collects on members, and forces the social network to get member consent before sharing nonpublic information beyond their privacy settings.

"Hundreds of millions of users have entrusted their personal information to WhatsApp," Rich told Facebook and WhatsApp. "The FTC staff will continue to monitor the companies' practices to ensure that Facebook and WhatsApp honor the promises they have made to those users."

Facebook still requires regulatory approval internationally before its WhatsApp purchase becomes final. The company's shares closed at $59.16 on Thursday, down more than 5 percent from Wednesday's close.