ACCC hauls Facebook to court for 'deceptive' conduct

Consumer watchdog accuses social media giant of misleading Australians in its promotion of a smartphone app. Here's the rundown.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Facebook Inc (NASDAQ: FB) faces legal action in the Australian Federal Court, accused of "false, misleading or deceptive conduct".

The Australian Competition and Consumer Commission (ACCC) announced on Wednesday it has started proceedings against the US company and two subsidiaries.

The allegations involve the promotion of Facebook's 'Onavo Protect' smartphone app.

The consumer watchdog accuses the social media giant of spruiking the app as a way to protect private data – when in reality it was harvesting data for commercial purposes.

"Facebook was collecting and using the very detailed and valuable personal activity data of thousands of Australian consumers for its own commercial purposes, which we believe is completely contrary to the promise of protection, secrecy and privacy that was central to Facebook's promotion of this app," said ACCC chair Rod Sims.

Onavo Protect was promoted as a virtual private network (VPN) tool, which is commonly used by individuals and workplaces to encrypt and anonymise internet activities.

The app's marketing used phrases like "save, measure and protect" and the slogan "Keep it secret. Keep it safe".

"Consumers often use VPN services because they care about their online privacy, and that is what this Facebook product claimed to offer," Sims said.

"In fact, Onavo Protect channelled significant volumes of their personal activity data straight back to Facebook."

ACCC is seeking orders and penalties from the court.

A man recoils from his shadow which has a long nose, indicating accusations of lying and deception

Image source: Getty Images

Facebook says it was 'always clear'

A Facebook spokesperson told The Motley Fool that the company has co-operated with ACCC's investigation "to date".

"When people downloaded Onavo Protect, we were always clear about the information we collect and how it is used," said the spokesperson.

"We will review the recent filing by the ACCC and will continue to defend our position in response to this recent filing."

It is understood Apple Inc (NASDAQ: AAPL) deleted the Onavo Protect from its app store in 2018 for not complying with terms and conditions. The violations included harvesting data about other apps on the device to perform analytics.

The Australian court case adds to Facebook's already substantial legal woes. 

The US Federal Trade Commission earlier this month started court action alleging the company is maintaining an "illegal" monopoly.

That court filing accuses Facebook of using data collected from Onavo Protect to identify potential future acquisitions.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Facebook. The Motley Fool Australia has recommended Apple and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Man putting golden coins on a board, representing multiple streams of income.
Record Highs

Guess which ASX ETF just hit an all-time high today?

This popular ASX ETF just hit a record high.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Broker Notes

Why this quality ASX dividend share is tipped to surge 55%

A leading broker expects this ASX stock could rocket 55% atop paying two annual dividends.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Broker Notes

Buy, hold, sell: CBA, Reece, and Wesfarmers shares

Let's see what analysts are saying about these popular shares this week.

Read more »

Red buy button on an Apple keyboard with a finger on it.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to buy these shares.

Read more »

Red buy button on an Apple keyboard with a finger on it.
Broker Notes

3 reasons to buy Origin Energy shares today

A leading analyst expects more outperformance from Origin Energy shares. But why?

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why Monash IVF, Pro Medicus, Telix, and Woodside shares are storming higher today

These shares are starting the week in a positive fashion. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why A2 Milk, Metallium, Northern Star, and St Barbara shares are sinking today

These shares are starting the week in the red. But why?

Read more »

Business people discussing project on digital tablet.
Broker Notes

Buy, hold, sell: AGL, Origin Energy, and Woodside shares

Here's what analysts at Shaw and Partners think of these shares.

Read more »