Meta companies ordered to pay $20m to Australian government for misleading customers

The social media giant has been ordered to pay a hefty fine after it conceded to misleading consumers with a security app.

Companies run by Mark Zuckerberg’s social media giant Meta have been ordered to pay the Australian government $20m after they were found to have misled customers by secretly collecting their data for Facebook’s commercial benefit.

The Australian Competition and Consumer Commission (ACCC) launched action against Meta companies Facebook Israel and Onavo Inc in the Federal Court in relation to the Onavo Protect mobile app, which was shut down in 2019.

The consumer watchdog claimed the subsidiaries misled its customers by advertising that the app, a VPN security platform, could “keep your data safe when you browse and share information”.

But it was later revealed Facebook used the data to support its market research activities, including potential future acquisition targets.

Subsidiaries of Meta have been ordered to pay the Australian government $20m. Picture: Justin Sullivan / Getty Images North America / Getty Images via AFP

The data was aggregated and anonymised to help advertisers “identify local competitors, notice big trends, find overlaps in use, benchmark performance and notice a shift in consumer attention”.

The ACCC argued the ads were not clear that Meta was using the app as a “business intelligence tool” that knew “nearly everything” the users were doing on their devices.

Both companies admitted to contravening the Competition and Consumer Act 2010, with Federal Court Justice Wendy Abraham describing the breaches as “undoubtedly serious”.

Thousands of Australians had been deprived of the opportunity to make “informed” decisions about the use of their data, Justice Abraham said.

She has now ordered the two companies to each pay $10m.

“The listings that contained the statements were likely to mislead or deceive and liable to mislead the public in the absence of sufficient disclosures to Australian consumers (which they admit were not made in those listings) of the fact that Australian users’ data would be used for purposes other than providing Onavo Protect,” her judgment read.

Meta owns Facebook and Instagram. Picture: NCA NewsWire / Nicholas Eagar

Justice Abraham slammed the companies for collecting “an extensive variety of data about users’ mobile device usage” despite the app being promoted to protect customer’s personal information.

It was acknowledged that disclosures were made in the app’s terms of service and privacy Policy.

But the judge found this information was not “prominent” on the advertisements in both the Apple App Store and Google Play Store in 2016 and 2017.

“An anonymised and aggregated form of that data was provided to their parent company, Meta Platforms Inc (Meta), and used by Meta for a range of commercial purposes,” she said.

While she ordered the companies to pay $10m each, Justice Abraham noted the maximum penalty she could have imposed was “more than $145bn”.

But she said she was satisfied the agreed penalty “satisfies the significant element of deterrence”.

“It carries with it a sufficient sting to ensure that the penalty amount is not such as to be regarded by the parties or others as simply an acceptable cost of doing business,” she said.

Both companies, which operate under Meta, must also pay $400,000 of the ACCC’s legal costs throughout the proceedings.

The fine wraps up just one branch of Meta’s legal issues in Australia. It is still facing court action by the Office of Australia Information Commissioner over its dealings with Cambridge Analytica in Australia during the 2016 US election.

Originally published as Meta companies ordered to pay $20m to Australian government for misleading customers