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.
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.
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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.
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