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FTC Reminds Facebook to Honor WhatsApp Privacy Pledges

Stocks in this article: FB

NEW YORK (The Deal) -- The Federal Trade Commission on Thursday notified Facebook (FB - Get Report) that it must honor privacy promises WhatsApp has made to its users after the social networking giant completes the $19 billion purchase of the mobile messaging company, although the admonition applies only to data WhatsApp has already collected.

Facebook is free to change WhatsApp's policies at any time in regards to data it may collect in the future.

According to the FTC, before making any material changes to how the companies use data already collected from WhatsApp subscribers, they must get affirmative consent from the users. In addition, the companies must not misrepresent the extent to which they maintain the privacy or security of user data. The FTC also urged the companies to give users the opportunity to opt out of any future changes to how newly-collected data is used.

FTC Consumer Protection Bureau Director Jessica Rich notified Facebook and WhatsApp via letter about their obligations to protect the privacy of their users in light of Facebook's proposed acquisition of WhatsApp.

Facebook officials said Thursday that the FTC has approved the acquisition without extending the review with a second request for information. The deal was announced in February.

In a letter to the two companies, Rich noted that WhatsApp has made clear privacy promises to consumers and that, "regardless of the acquisition, WhatsApp must continue to honor these promises to consumers."

She stressed if WhatsApp fails to honor these promises after the acquisition, the companies could be in violation of FTC Act's Section 5 prohibitions on unfair or deceptive methods of competition and, potentially, the FTC's previous order sanctioning Facebook for privacy violations.

In 2011, Facebook settled FTC charges that it deceived consumers by failing to keep its privacy promises. Under the terms of the FTC's order against the company, it must get consumers' affirmative consent before making changes that override their privacy settings, among other requirements.

In March privacy groups the Electronic Privacy Information Center and the Center for Digital Democracy urged the FTC to include investigate the merger and to add privacy concerns to the competition issues typically examined during a merger review.

Bingham McCutchen partner Darren Tucker said the FTC's letter shows that the commission is not going to add privacy issues to its merger reviews. "This was a pretty thorough rejection of the privacy groups' arguments," he said. "The FTC has said repeatedly that it's really not appropriate to incorporate non-competition factors into merger analysis. This letter reaffirms that principle."

Tucker noted that the nowhere in the letter is there a suggestion the deal enhances the likelihood that users' privacy will be violated.

Another takeaway, he said is that the FTC acknowledged that Facebook is free to change its privacy policies regarding data collected from WhatsApp users in the future.

"The letter is saying for data collected in the past, they must apply the prior policies, but going forward can change them for new data."

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