Meta Sues FTC on Privacy Move in Challenge to In-House Court (1)

Meta Platforms Inc. sued the US Federal Trade Commission claiming its in-house trials violate the Constitution and asked a court to immediately halt the agency’s bid to change a 2020 privacy settlement.

The social networking giant filed the suit in Washington federal court seeking a halt to FTC proceedings related to Meta’s 2020 privacy pact. It was the second attempt by the parent company of Facebook and Instagram to block the proceeding in court.

On Monday, US District Judge Timothy Kelly ruled that the FTC could move forward with a proceeding to revise the 2020 privacy settlement and that the federal court didn’t have jurisdiction over that agreement. Under that deal, Meta agree to pay a $5 billion fine — the biggest levied for a privacy violation — and make changes to its internal privacy checks.

In May, the FTC accused Meta of continuing to violate its privacy pledges and started an internal proceeding to revise the 2020 settlement. Meta responded by asking Kelly, who had signed off on part of the settlement before it was finalized, to stop the FTC from moving forward and to file a case in federal court.

The company alleges in the new lawsuit that the FTC violates due process by acting as both prosecutor and judge in administrative proceedings.

Meta said it filed the suit because Kelly’s earlier decision didn’t address issues related to the FTC’s constitutionality.

‘Important Issues’

“The FTC’s unilateral attempt to rewrite our privacy settlement agreement raises serious and important issues,” Meta spokesperson Christopher Sgro said. “The FTC shouldn’t be the prosecutor, judge, and jury in the same case.”

The FTC declined to comment.

On Wednesday, Meta also appealed Kelly’s ruling and asked the FTC to pause its in-house proceeding while that is underway.

Meta’s new lawsuit comes among a series of challenges to the FTC’s constitutional structure. Biotech giant Illumina Inc., which the FTC ordered to unwind a $7 billion acquisition of cancer detection startup Grail, has also argued that the in-house proceedings at the agency violate constitutional rights to due process and that the case was an instance of government overreach.

Other regulators are facing challenges to their constitutionality. On Wednesday, the US Supreme Court heard arguments in a case that could potentially strip the Securities and Exchange Commission of its ability to go before in-house judges to seek multimillion-dollar penalties.

The case is Meta Platforms Inc. v. The Federal Trade Commission, 1:23-cv-03562, US District Court for the District of Columbia.

(Updates with company comment, additional details beginning in fifth paragraph.)

To contact the reporters on this story:
Sabrina Willmer in Washington at swillmer2@bloomberg.net;
Leah Nylen in Washington at lnylen2@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Elizabeth Wasserman

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