Meta (formerly known as Facebook) is facing criticism from the Federal Trade Commission (FTC) regarding its privacy settlement agreement. In 2020, Meta paid a hefty $5 billion fine and agreed to make significant changes to its privacy practices. However, Meta has raised concerns about the FTC’s attempts to rewrite the settlement agreement, questioning the agency’s constitutional authority and Meta’s due process rights.
Although the FTC has remained silent on the matter and has not provided any comments, Meta’s criticism centers around the FTC’s two methods of enforcement. The agency can either file a lawsuit through a federal court or utilize its “administrative process” established by Congress in the FTC Act of 1914. Under this administrative process, companies facing in-house cases can either settle the charges or challenge the complaint with an administrative law judge.
Meta has filed a lawsuit arguing that this structure is unconstitutional and infringes upon its due process rights. The company believes that the FTC’s dual role as both the prosecutor and judge in enforcement cases is unfair. Meta’s case against the structure is not unique, as other companies have made similar arguments in the past to limit the powers of regulatory agencies.
This issue extends beyond Meta and the FTC, as regulatory agencies in other sectors face legal challenges to their authority. The Supreme Court recently heard arguments challenging the enforcement authority of the Securities and Exchange Commission. Similarly, the Consumer Financial Protection Bureau is also facing legal tests of its authority. In the face of these challenges, it is clear that regulatory agencies’ powers are being closely examined.
One such pending challenge to the FTC’s in-house court comes from Illumina, a gene sequencing equipment maker. Illumina is currently defending its takeover of cancer test-maker Grail and has challenged the FTC’s authority in an in-house court.
In a related development, in an April ruling, the Supreme Court sided against the FTC, stating that defendants can bring constitutional challenges to the agency’s administrative enforcement authority even before resolving the underlying case. This ruling forced the FTC to drop its challenge to the merger of two police equipment-makers.
As the dispute between Meta and the FTC continues, it showcases the ongoing discussions surrounding the authority and boundaries of regulatory agencies. These challenges are not limited to a single industry but span various sectors, provoking discussions on the constitutionality and due process rights of companies facing enforcement actions.