Privacy commissioner in court win against Facebook

The tech giant had claimed it technically doesn’t operate its business in Australia, but the Federal Court has disagreed.

Angelene Falk, Australia’s Privacy Commissioner.

Tech giant Facebook has lost a case in the Federal Court against Australia’s privacy watchdog, with the full bench of the court dismissing Facebook’s appeal that it had lodged on the grounds that it doesn’t actually operate in Australia.

The judgment paves the way for a larger case to now proceed against Facebook over its privacy settings and how it handles user data.

The case relates to the now-infamous Cambridge Analytica data analysis firm and its personality quiz ‘This is Your Digital Life’, which the Australian Information Commissioner alleges unlawfully disclosed the personal information of thousands of Australians between 2014 and 2015.

When launching Federal Court action in 2020, Commissioner Angelene Falk said that Facebook had breached Australian privacy law and that its “opaque” privacy settings made it difficult to exercise control over their own data.

“We claim these actions left the personal data of around 311,127 Australian Facebook users exposed to be sold and used for purposes including political profiling, well outside users‘ expectations,” she said.

“All entities operating in Australia must be transparent and accountable in the way they handle personal information, in accordance with their obligations under Australian privacy law.”

The Federal Court on Monday ruled against Facebook and ordered the company to pay the Information Commissioner’s costs, ruling that the Commissioner’s case may proceed. Facebook had lodged an appeal to set aside an earlier ruling by Federal Court Justice Tom Thawley, on the basis that it did not carry out its business – including operating cookies and managing the Facebook login on users’ devices – in Australia.

“I reject Facebook Inc’s liminal objection that the only being business being conducted in relation to Australian users was business conducted by Facebook Ireland,” Justice Nye Perram wrote in his ruling. “At the prima facie level, the Data Processing Agreement provides abundant evidence to the contrary.

“The primary judge was correct to conclude that conclude that an inference was available that Facebook Inc was carrying on business in Australia and that it collected in Australia the personal information which is the subject of the Commissioner’s case.”

The Federal Court can impose fines of up to $1.7m for each serious privacy breach, according to the Information Commissioner.

Shares of Facebook parent Meta plunged 24 per cent in opening trading on February 3. Picture: AFP

Ms Falk said she welcomed the decision and that her office would continue to move forward with the case and “looked forward to the hearing of substantive matters”.

“We are reviewing this morning’s judgment and as such we have no comment at this time,” a Facebook spokesman said.

Facebook’s parent company Meta is also still facing an upcoming Federal Court case against it from Australia’s competition and consumer watchdog, over claims that two Meta subsidiaries secretly collected and aggregated users’ personal data for Facebook’s commercial benefit.

The action relates to Facebook’s Onavo Protect mobile app, which provided a virtual private network (VPN) for users. Facebook shut down that app in 2019.

ACCC chair Rod Sims said that between February 2016 and October 2017, Facebook misled Australian customers by telling them the Onavo app would keep users’ personal data private and secure, when instead Facebook allegedly used the data to support its market research activities, including potential future acquisition targets.

The ACCC is seeking declarations and pecuniary penalties.

Shares in Meta Platforms tumbled by more than 20 per cent last week, with the company posting its first ever drop in daily active users. More than $US200bn was wiped from Meta’s valuation, the largest single-day fall in US company history.

Meta, formerly known as Facebook, said it’s grappling with a number of issues including inflation, supply chain disruptions with its advertisers and privacy changes implemented by Apple, affecting iPhone users.