Two Meta-owned companies, Facebook Israel and Onavo Inc., have been fined a total of AUS$20 million (~$13.5M) by Australia's Federal Court.
The penalty comes after an action brought by the Australian Competition and Consumer Commission (ACCC) over allegations that the companies engaged in conduct liable to mislead users in breach of the Australian Consumer Law.
The Onavo Protect VPN App
The controversy stems from the Onavo Protect VPN app, which was developed and supplied by the subsidiaries. The app claimed to offer data protection and safety to users, positioning itself as a free and secure VPN service.
However, the ACCC found that the app's promotion in Google and Apple App Store listings was misleading as it failed to adequately disclose that users' data would be used for purposes beyond providing the VPN service.
According to the ACCC, the personal activity data collected by Onavo Protect was shared with Meta (formerly known as Facebook Inc.) for commercial benefit.
The anonymized and aggregated data included records of users' internet and app activity, revealing every app they accessed and the time spent using those apps. Meta reportedly used this data for market research activities, enabling the tech giant to gain insights into popular rival apps and inform its acquisition strategy.
Between February 2016 and October 2017, the Onavo Protect app was installed over 270,000 times by Australian users. The commission noted that the misleading descriptions in the App Store listings conveyed the impression that users' data would solely be used for the VPN service, leading to potential misuse of their data for Meta's own commercial interests.
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Misleading Descriptions
ACCC Chair Gina Cass-Gottlieb emphasized the importance of consumers making informed choices about their data usage without being misled. The penalty reflects the watchdog's concern over data privacy and transparency in the digital ecosystem.
"We took this case knowing that many consumers are concerned about how their data is captured, stored, and used by digital platforms. We believe Australian consumers should be able to make an informed choice about what happens to their data based on clear information that is not misleading," Cass-Gottlieb said in a statement.
Facebook Israel and Onavo, in a joint submission to the Court, acknowledged that the App Store listings gave the impression that Onavo Protect users' data would solely serve the purpose of providing the Onavo Protect VPN service, according to the commission.
However, the listings did not disclose that data collected from Australian users' online activities through Onavo Protect was also utilized for other objectives, including acting as a 'business intelligence tool'.
"In the case of the Onavo Protect app, we were concerned that consumers seeking to protect their privacy through a virtual private network were not clearly told that in downloading and using this app they were actually facilitating the use of their data for Meta's commercial benefit," Cass-Gottlieb added.
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