Proposed Consent Agreement In the Matter of Facebook, Inc., FTC File No. 0923184 #00038 

Submission Number:
Chris Hoofnagle
UC Berkeley Law
Initiative Name:
Proposed Consent Agreement In the Matter of Facebook, Inc., FTC File No. 0923184
Congratulations on your recent settlement with Facebook. The complaint and settlement obviously reflects a ton of careful work. The fact development shows the FTC's technical expertise, and the importance of memorializing the changing representations made by information-intensive companies. Kudos to your staff for marshaling this action to completion. I write to argue that Facebook has engaged in a deliberate, unfair strategy to open profiles, and that as a result, the consent agreement does not place the victim class of millions of Americans into its expectancy position--the settings they had prior to Facebook's adjustment of them. Michael Zimmer and I argued in 2010 that, "Information-intensive companies such as Facebook follow a Machiavellian public relations strategy when introducing new programs. Without warning, these companies introduce "features" that invariably result in more information being shared with advertisers, wait for a negative reaction, and then announce minimal changes without affecting the new feature. They explain away the fuss with public relations spin: "we are listening to our users," "we didn't get it right this time," "we look forward to your feedback," etc. This strategy works, time and time again." Count 3 of the complaint labels this activity as unfair. Facebook was on notice that their activities were unfair since the Gateway case of 2004. Given that Facebook has top-quality legal representation, the company had to have been advised that its changing of settings was vulnerable to an unfairness claim. Facebook had to know of the Gateway remedy too--in that case, Gateway was required to disgorge its gains from selling a list of consumers it promised to keep private. Here, however, Facebook is being permitted to keep its gains from the behavior described in count 3 of the complaint. Facebook still reached its goal of opening up profiles. Thus, Facebook reaped gains from a clearly unfair business practice. The settlement is insufficient to address this problem for two reasons: first, Facebook's promise to not break the law again is illusory. It can't break the agreement, because Facebook has already opened up profiles to the maximum extent possible. It has won its battle to tilt the disclosure landscape towards publicity. Second, it is also insufficient because the millions of Americans whose settings were affected are worse off, and Facebook is better off. Consistent with the precedent set by Gateway, the Commission should 1) require Facebook to disgorge the monetary gains from opening up user profiles. Facebook undoubtedly captured more advertising revenue from publicity given to user information. It should not profit from the unfair practice of retroactive settings changes. 2) require Facebook to roll back settings to the default when the user enrolled. These two interventions are required in order to place Facebook's users in the same position they would have been had Facebook not willfully engaged in unfair business practices. Respectfully submitted, Chris Hoofnagle