Pursuant to Section 6(b) of the FTC Act and a December 11, 2020, resolution of the Federal Trade Commission (FTC) entitled “Resolution Directing use of Compulsory Process to Collect Information Regarding Social Media and Video Streaming Service Providers’ Privacy Practices,” the FTC has now issued orders requiring Facebook, WhatsApp, Snap, Twitter, YouTube, ByteDance, Twitch, Reddit, and Discord to file information concerning the method and manner in which they collect, use, store, and disclose information about users and their devices.  The companies have 45 days to respond, and, at the moment, the study is not part of any specific law enforcement proceeding.

The FTC voted 4-1 in favor of beginning the study.  A Joint Statement of three of the supporting FTC Commissioners–Chopra, Slaughter, and Wilson—highlights that several “social media and video streaming companies have been able to exploit their user-surveillance capabilities to achieve such significant financial gains that they are now among the most profitable companies in the world.”  The Joint Statement further explains:

“One key aspect of the inquiry is ascertaining the full scale and scope of social media and video streaming companies’ data collection. The FTC wants to know how many users these companies have, how active the users are, what the companies know about them, how they got that information, and what steps the companies take to continue to engage users. The inquiry also asks how social media and video streaming companies process the data they collect and what kinds of inferences they are able to make about user attributes, interest, and interactions. The FTC wants to understand how business models influence what Americans hear and see, with whom they talk, and what information they share. The questions push to uncover how children and families are targeted and categorized. These questions also address whether we are being subjected to social engineering experiments. And the FTC wants to better understand the financial incentives of social media and video streaming services.”

Commission Phillips submitted a Dissenting Statement, primarily criticizing the breadth of the inquiry.

Although it is very early in this inquiry, we can glean certain discrete details about what this order does and does not mean. First, this order has little direct connection with the public debates about free speech and Section 230.  Rather, this order does signal that the primary consumer protection and privacy watchdog is going to dive into the so-called attention economy.  This attention economy drives the online advertising goldrush, and many of the “free” online services that we enjoy. However, the effects that this still-new economic model may have upon consumers remain poorly understood.

The FTC study may shine a light on the practice of offering free services in exchange for monetization of personal data.  The investigation may also lead to further activity at the federal level in areas such as child exploitation, misinformation, and violence with social media and video streaming services.  Sen. Edward Markey (D-Mass) and Sen. Richard Blumenthal (D-Conn.) already introduced a bill earlier this year that addresses the “non-transparent ways” digital media apps and platforms market to and collect information from users ages 16 and under.