ACCC takes Facebook to Federal Court for allegedly misleading app ads

The Australian Competition and Consumer Commission (ACCC) has commenced Federal Court proceedings against Facebook and two subsidiaries for allegedly misleading consumers in ads promoting a since-discontinued mobile app designed to protect data.

The watchdog is alleging that Facebook claimed its Onavo Protect app, which provided a free virtual private network (VPN) service, would keep users’ data private. In fact, the ACCC claims, the app collected, aggregated and used user data to commercially benefit Facebook.

That data included records of every app users accessed and the number of seconds per day spent on those apps, according to the ACCC. Facebook allegedly used that data in its market research activities.

The ACCC’s chair, Rod Sims, has led the charge against the digital platforms through the Digital Platforms Inquiry in addition to further, ongoing inquiries into both the platforms and the ad tech supply chain. The ACCC’s Digital Platforms Report, which capped off the first inquiry, covered concerns around Onavo Protect’s use and collection of data.

Last week, and as a result of the inquiry and report, legislation was introduced to parliament that, if passed, will enable news publishers to attempt to be paid for news by bargaining with Facebook and Google.

Rod Sims

Sims said that this Federal Court action stems from ads that promised: “Keep it secret. Keep it safe… Onavo Protect, from Facebook”.

“Through Onavo Protect, 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,” Sims said.

“Consumers often use VPN services because they care about their online privacy, and that is what this Facebook product claimed to offer. In fact, Onavo Protect channelled significant volumes of their personal activity data straight back to Facebook.

“We believe that the conduct deprived Australian consumers of the opportunity to make an informed choice about the collection and use of their personal activity data by Facebook and Onavo.”

The ACCC wants the court to penalise Facebook through fines, and forcing it to make declarations on the matter. But the social media giant is defending the case.

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

“We’ve cooperated with the ACCC’s investigation into this matter to date. We will review the recent filing by the ACCC and will continue to defend our position in response to this recent filing.”

Facebook acquired Onavo in 2013, but the app was removed from Apple’s app store in 2018 and the Google Play store in 2019 for, among other things, collecting information about other apps on users’ devices. Facebook discontinued the app last year.

In the US, the Federal Trade Commission (FTC) took legal action against Facebook for allegedly illegally maintaining its monopoly by engaging in anti-competitive conduct. The FTC is arguing the company strategically acquired companies like Instagram and WhatsApp in order to eliminate threats to its monopoly. In court documents, the FTC has referred to Facebook’s use of Onavo Protect data to identify potential acquisitions.

Mumbrella has approached Facebook for comment on the ACCC’s court action.


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