So, the FTC got some press today for announcing a high profile "settlement" with social networking startup Path
. You might think that this is entirely about the news that came out a year ago, about Path uploading entire user address books
to its server. If you don't recall, that story got a lot of press coverage. Basically, Path, like tons of social networks and mobile apps, had a feature which was "see if your existing friends already use this app and connect to them." But, to do that, it needed to know who your friends are. The process it used to do this was to upload your address book in the background and then compare it to their user base. This was, certainly, a somewhat questionable practice on privacy grounds, but it was something that lots of companies did
, because it was a simple
way to use the "find your friends" feature.
Of course, as soon as the story about Path went viral, most companies who were doing this very, very quickly dropped the practice, and figured out other, less privacy-invasive ways to connect you to your friends. That's a good thing. So, does the company need to be punished? It seems like negative publicity and the market took care of everything.
Well... if you look at the details of the Path "settlement," it wasn't even really about that issue at all
. Yes, Path agreed to have outside privacy audits for the next 20 years (which is the FTC's go to "punishment" plan), but the hyped up $800,000 payment actually had nothing whatsoever to do with the uploading address books
. Instead, it dealt with a different issue. During the investigation, the FTC also
found that Path likely violated COPPA, the silly and misguided law
that basically means most sites put in their terms that they don't allow anyone under 13 to use it. Of course, in practice this has significant unintended consequences, including not letting perfectly reasonable services be available to kids and (more likely) parents teaching their kids to lie
about their age.
It turned out that for a brief period of time, Path did not exactly follow the COPPA rules, and actually let a few thousand kids under the age of 13 sign up. So, they may have violated the rule. But... Path had discovered and fixed this
well before the FTC investigation began. The company claims it was just an oversight that their system did not automatically reject users under the age of 13.
So... the company made a mistake, caught it and fixed it, without having the FTC get involved at all. And there's no evidence, at all, that it misused the data it collected here. And yet it needs to pay $800,000? Why? For a big company, $800,000 may be small beans, but for a startup, that's significant money.
Oh, and even more bizarre: as noted earlier, lots
of companies did similar things to Path, but the FTC only went after Path. When asked why they only went after Path, outgoing FTC boss Jon Leibowitz gave a non-answer, saying that they're just a small agency
and so they have to "pick and choose which malefactors you want to go after." So they chose the one most likely to create headlines -- and forced them to cough up $800,000 over a "violation" that was the result of an accident, which the company had already discovered and fixed, and for which no abuse was found. That doesn't seem like good policy. It seems like vindictive choices by the FTC focused on the maximum potential to create headlines, rather than actually protect people's privacy.