Facebook Inc (NASDAQ:FB)'s $19 billion purchase of WhatsApp could be facing a hurdle. Privacy advocates have asked the Federal Trade Commission to block the social networking giant's acquisition of WhatsApp until Facebook clarifies how it plans to use the personal data of more than 450 million WhatsApp users. It's not the first time the Menlo Park-based company has come under fire for its privacy practices.
Facebook reiterates that WhatsApp will operate as a separate business
There is a big reason to be concerned. WhatsApp is known for its ad-free service and high standards of privacy. And Facebook Inc (NASDAQ:FB) is equally notorious for violating user privacy policies. European Union watchdogs are already keeping an eye on the deal. A total of 28 European authorities may open probes into WhatsApp. They all have the same concern: how Facebook would use the mobile messaging company's massive user data.
WhatsApp has been committed to not collecting user data for advertising purposes. The non-profit privacy groups Center for Digital Democracy and the Electronic Privacy Information Center said in a filing with the Federal Trade Commission that there is no guarantee that WhatsApp's commitments will remain true after it becomes a part of Facebook Inc (NASDAQ:FB). The groups urged the regulator to open an investigation specifically to figure out Facebook's ability to access WhatsApp's user data.
Facebook has tweaked privacy policies of firms it acquired in the past
Facebook Inc (NASDAQ:FB) generated most of the revenues through targeted advertising. In response to the groups' filing, the social networking giant said that WhatsApp will continue to operate as a separate entity, and will honor all its commitments related to security and privacy. WhatsApp has a "no advertising" policy, and it charges users $1 annual fee after one year of free service. It collects only the user's mobile phone number. Most other online services, including Facebook, collect email, phone number, age, education, profession, name and other data.
Facebook Inc (NASDAQ:FB) and WhatsApp both are trying to reassure users and regulators that the policies won't change. But privacy advocates said that Facebook has tweaked the privacy policies of companies it has acquired in the past, including Instagram.
Facebook Inc (NASDAQ:FB) stock gained 0.54% to $71.22 in pre-market trading Friday.