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Frank Cappello: [00:00:00] Hello and welcome to this week's bonus episode of Lever Time, exclusively for The Lever, supporting subscribers. I'm Lever Time producer Frank Capello. Today we'll be sharing David Sirota's interview with media strategist Jason Kint about Facebook's parent company Meta, which is currently suing the Federal Trade Commission to prevent regulators from reinforcing a 2020 privacy settlement regarding the company's monetization of user data from children. so what's at issue is a 2020 privacy settlement that required Facebook to pay a 5 billion civil penalty and expand children's privacy protections.

Then in May of 2023, The FTC proposed changes to the settlement, Which prohibited Meta from monetizing the data it collects from users younger than 18 years old.

Now, Facebook's parent company, Meta, is suing the FTC, claiming its [00:01:00] authority is unconstitutional, and if the lawsuit is successful, it could seriously kneecap the FTC's regulatory abilities.

In today's interview, David speaks with Jason about what Meta's lawsuit could mean for the future of tech regulation. Jason also breaks down the methods tech companies use to harvest data from children, how parents can protect their kids, short term profits often leads to a less safer internet for everyone.

Thanks so much for being a supporting subscriber and funding the work that we do here at The Lever. Now here's today's interview.

David Sirota: Hey, Jason, how you doing?

Jason Kint: I'm good. How are you,

David?

David Sirota: I'm good. I'm good. I've been reading about this Facebook lawsuit and you seem to be somebody who knows about it. So I guess before we get to the lawsuit, between Facebook or I guess as it's called now meta and the federal trade commission, it all stems from this privacy settlement that the company, to, uh, with the FTC, why don't we start there?

[00:02:00] What happened in 2020? what was Facebook charged with? What did it agree to do? Uh, and where are we now?

Jason Kint: Got it. Yeah, good question. And I, there's a lot to unpack there, but I won't go too far back except to say that Facebook already had a settlement with the FTC from a decade, almost a decade earlier, that was a consent decree. So they had heightened responsibility and restrictions, let's just call it. And so, When, uh, very famously, uh, Facebook's, uh, Cambridge Analytica scandal broke in 2018 that kicked off, uh, another, you know, set of investigations, um, including by the Federal Trade Commission, the Justice Department, SEC, state AGs, et cetera, and so, and, They settled in 2019.

It was announced for 5 billion, which was, you know, a massive amount for a settlement and a record at that point with the FTC to essentially make it go away. you know, some of the [00:03:00] charges that were in that complaint, um, stem from their, whether or not the users actually had provided consent for that data.

If you recall, it was being shared, not just with. The users who installed apps, but also the friends data was being shared. And so that was one thing, but then there were a series of other things that came out as they were investigating and through press reports, etc. Including that they were white listing a whole number of devices and companies to still have data for a longer period of time.

If I recall correctly,

David Sirota: So Facebook is now. suing the FTC, tell us a little bit about, about that. It's a, this whole thing is, seems to be, seems to be back. Uh, and this particular case, uh, seems to revolve around, uh, children and, and the data that Facebook can glean from, uh, children who are using Facebook. Tell us about that.

Jason Kint: that's right. So they're already, so they're on double [00:04:00] double probation at that point from this, this new settlement for 5 billion. And. The FTC filed, uh, earlier this year, something called a, a show cause, which was, um, a request for Facebook to respond to a determination that they were going to put even more restrictions.

They're gonna open up that consent decree again. Um, and put even higher level restrictions on Facebook and Meta as it relates to, uh, children under 18. So, um, and, and most importantly, they were going to limit, uh, the data collection and use by Facebook of, of children under 18. And so as, as soon as that happened, um, as you can imagine, that's a big, big deal for, for Meta in particular when it's the future of their business and young people.

Um, and so. At that point, uh, Meta kicked off a series of, of tactics to try to stop that thing from happening, and that included going back to the original federal court where they had done their

settlement.

David Sirota: So let's talk about what, what [00:05:00] kind of data does Facebook? glean from children, how does it glean that data? And, and why is that data harvesting a problem?

Jason Kint: I think we should separate that, that's a good question, I think we should separate it into two batches. There's, there shouldn't be any data being gleaned from children. under 13 by law. And so for those that watch these proceedings, there's also a massive lawsuit filed by state attorneys general over 40 of them that's playing out.

Um, and it just happened in the last few months. And so, and that involves data collection. And use of the platforms by kids under 13, which, which shouldn't be happening at all. And so there's that group. And then there's the group of 13 through 18. And, you know, I think to our best understanding, you know, a lot of this is from discovery and investigations.

You know, they're collecting data both [00:06:00] from active use by the users where, you know, as you can imagine, you're using the platform. And it's learning things either that you're explicitly typing in about yourself. Or watching your behavior on the platform or importantly also watching you elsewhere when you're not actually on the app and they've got the ability to and get data from third parties based on what you're doing elsewhere and that's probably the one that's most kind of troubling because the average user says I wouldn't want that to happen and and you wouldn't expect it to be happening but it's kind of passively happening in the background.

David Sirota: And again, what would you say is problematic about that? I mean, if you're talking to parents, I mean, I'm a, I'm a parent of a 13 year old, like, like, what should I be worried about? Although, to be fair, my, my kid, when I've ever mentioned Facebook, he kind of eye rolls me and is like, Dad, that's the lamest platform ever.

None of my, none of my friends use Facebook. Uh, uh, but I just be curious, you know, you know, what should parents be concerned about [00:07:00] in terms of what Facebook is gathering about their kids and, and what it can do with that data or what, what other third parties can do with it?

Jason Kint: yeah, there's, you know, and, and to your last point, I mean, Instagram is obviously the future of the company and the brand that the children most like and appreciate, and that's a part of this, too, which is really, really important to know. so, you know, if you follow a lot of the research and investigations and what we saw from the Facebook whistleblower, Francis Haugen, et cetera, that came out, You know, that data allows them to do things to make the platforms more addictive, right?

And to, for children and, and to program the algorithms in ways that keeps them chasing more and maybe to go down rabbit holes and, and all sorts of harm that can happen to children, which are alleged in the state AG's lawsuits. And, and some of it's quite troubling, frankly, when you see what they knew from internal research and how they talked about it, including You know, the, the state AG suit includes a [00:08:00] decision that was made apparently at the company that it would cost them 1 percent of revenue if they made a change that would significantly help the well being of children.

And so, so that whole trade off of profit for, you know, profit for safety, if you will. You know, separately, there's just, you know, it's no different than with, uh, with adults, there's privacy is autonomy and, you know, and being able to have the free will to make your own decisions about who gets to watch you on the internet.

And when you, especially when you get to third party data, you get to the point of like this device that a child is likely carrying around 24 seven in their pocket that knows every single location they go to and nearly everything that you do and how they communicate. They should have some sort of decision or better yet.

The parents should be involved in terms of who has access to that data.

David Sirota: You know, I, I want to ask just cause you probably know some answers to these questions. And these may seem like stupid questions. I noticed for [00:09:00] instance, that if I'm shopping for something online, uh, in a web browser or something, and then, I don't know, a half hour later, I'm scrolling on, uh, Instagram, typically doom scrolling to try to make myself feel awful and feel like the world is going to end because that's, that's how I scroll the internet.

I'll suddenly get. Ads for some of the kinds of things that I was shopping for. Uh, and I presume that has something to do with the fact that I was probably in another tab, logged into Facebook, or logged into Meta, or logged into my Google account. But it's extremely opaque to me, the average user. How that actually happened.

I wonder if you could talk a little bit about how those things routinely happen and what are, what are some of the things that, that happen all the time that are perhaps even allowed that people don't even [00:10:00] think about, don't even know necessarily about, uh, like the example that I just suggested.

Jason Kint: Yeah. Um, you know, some of this is in the bucket of allegations and. You know, speculation too over the years, uh, because we don't know, we don't know except that they're all the, you know, empirical data,

David Sirota: Hold on a minute. Let me, let me just stop you

there. Hold on a minute. When you say, we don't know, I presume you're, you're alluding to the fact that it's effectively a black box.

Jason Kint: it's a black box, for sure, for

sure,

David Sirota: So, so there's no like, there's no open, like, the example I just suggest to you, and I've heard kind of wild examples where like you say something to, to Siri or, or, uh, uh, Alexa, and then you're getting ads for it, or you, you, you know, you heard a song or something.

And those seem a little bit farther out there. I am telling you, like the example I just gave you is like a legit real example that happens often. And you're telling me that, that, that we, the public. We don't really know exactly what's going on.

Jason Kint: that's true, [00:11:00] that's true, I'll take it a step further, we, like, at the simplest level, we know that, you know, let's say, example, Facebook, and this, you know, they disclosed this in some, some parliamentary proceedings a few years ago, that they had tags on over 8 million websites. And every one of those tags could collect data and based on what the user is doing on the sites.

And so, just think about 8 million websites and being able to see what's happening across those sites. That's one, you know, one tactic, but when you get into that, we don't know bucket on the extreme. You've got yes Can it listen to you through the mic on the phone and therefore make targeted ad decisions?

I know of security folks that have tried to break that and they've said that they don't believe that actually happens They don't the mic that one often kind of comes up that they're listening to you And they don't believe that that's happening. So, but, you know, I think a better example probably is, this is from Facebook's own internal leaked documents.

One of their folks that was in charge of figuring out a better [00:12:00] way to handle privacy because of new legislation and rules, described it as, when data comes into our systems, it's like an ink in a, in a lake, was the metaphor he used. And so, it's like dropping ink in a lake and we can't We can't identify it at that point, and we can't retrieve it.

If the user wants to delete their data, it's almost impossible for us to do it.

David Sirota: Their, their black box is so opaque, so complicated, so, uh, elaborate, that essentially,

they're, they're not even sure how it happened.

Jason Kint: And that may be by design, frankly, right? And so, you know, all this discussion around AI and machine learning, they've been doing that in the ads business for years, ever since really the Cambridge Analytica scandal. To kind of train their ad targeting in a way that it's hard to unravel.

David Sirota: So let's talk, let's go back to the, to the FTC, uh, meta. battle here. This, privacy settlement, the lawsuit, a little bit about the FTC. The FTC seems to be taking a really, [00:13:00] uh, aggressive, uh, role in trying to regulate corporate America, uh, at large at the FTC and the CFPB seem to be the most aggressive, two of the most aggressive, uh, Biden administration agencies.

This, this tussle between the FTC, and Facebook meta, I mean, what do you think it says about the role of an, of an agency like the FTC? is the FTC playing the role it should be playing? And, and maybe for those who don't even know what the FTC's jurisdiction is, what it really is, I mean, it's got a kind of vague sounding name, the Federal Trade Commission.

Maybe tell us a little bit about, about what it's supposed to be doing, what it's done, and. Perhaps in the past and what's so new about what it's doing now.

Jason Kint: you know, at the, at the simplest level, I describe it as, you know, consumer protection, which includes, you know, deception And antitrust competition. And so what it is doing, which is incredibly uncomfortable for a company [00:14:00] like Meta, is they're bringing those two together, which the FTC can uniquely do.

So they're thinking about Market power and the thinking about consumer privacy and data and the harms that can come from misuse of that data, especially when it's being used to maintain market power. Typically, those two items have been kept separate in silos, and the FTC is able to kind of bring them together in their analysis, and I, and I see them doing that in this case, where you've got a company that, you know, maybe there's one other company in Google that, Um, that has access to much of what we do on the Internet and is really a, you know, it's hard not to use.

Some of Meta's products in our lives. WhatsApp, Facebook, Instagram. I mean, some of our schools now almost require us to use Facebook for keeping up socially. And on top of that, there's misuse of [00:15:00] data and a repeated pattern of misuse of data, right? So they're on, we talked about, they're on double probation at this point.

And so, you know, yes, you can pay 5 billion to make us go away, but if you continue to abuse that data, if you particularly abuse it with young people, You know, the only reason you're able to get away with that is because of your market power. And so we're going to step in and, and do something about it. I actually think that's perfectly appropriate and it's great to see.

David Sirota: Now the headline from the FTC back in May. FTC proposes blanket prohibition preventing Facebook from monetizing youth data, not just collecting it, but monetizing it. Now, I think most people who hear that are like, yeah, that, that seems like a basic, defensible position. I can't believe that that hasn't already been prohibited.

Can you tell us a couple of ways that we, we can assume or intuit that? Companies like Facebook are able to not only [00:16:00] collect that data, but monetize it. I mean, is that selling it to third parties? Is that the advertising stuff we've been talking about? I mean, what, what, what ways can they monetize, my kid's data for instance?

Jason Kint: if you study Facebook and Meta, um, you know, there's one data point, or I shouldn't use that term, there's one phrase that they'll use consistently, particularly when they're in front of Congress or any parliament, and that's, we do not sell your data. Like that's, they've got that programmed into their executives.

The Internet works differently, particularly the advertising marketplace over the Internet, and you don't necessarily need to sell that data. The data doesn't have to change hands. You can actually use it in that momentary piece of attention to target an ad to micro target add to that user, and you're essentially leasing it right for just a moment to that advertiser.

In order to micro target an ad. And so, Facebook has that ability, as well as anybody. Again, maybe [00:17:00] Google would compete on micro targeting of ads. And then, on top of that, the Facebook platform allows any advertiser to onboard and upload its own data. So they can look for its own users on Facebook's platforms, Instagram.

And so they onboard that data, which just adds to that, that giant lake of data that Facebook has. And so unusual for, you know, in the internet economy or unique to Facebook is it's about 97 or 98 percent of their, their revenue. So their entire business depends on it. You've heard the term surveillance capitalism.

That's their

business.

David Sirota: So. Is it fair to say that as non controversial as that FTC headline is, FTC proposes blanket prohibition preventing Facebook from monetizing youth data, as not controversial as that may seem to Almost everybody listening to this podcast. Is it fair to say that a company like [00:18:00] Facebook sees this as if we allow any regulation of this type, it is a slippery slope to regulating the thing.

Aka data that is ostensibly 100 percent of our business. I guess what I'm asking is does Facebook's response suing the FTC on constitutional grounds, essentially arguing that the FTC doesn't really have much of a right to exist as an agency. Can we glean from that response a sense that Facebook isn't just fighting this on the merits?

of the attempted regulation, but trying to prevent this kind of concept regulating data from ever moving forward.

Jason Kint: Certainly. That's it. You know, they're and they've said, you know, internally, we've seen talking points from the company in the last few years that they're going to go to the mats to try to defend their business. And, and this is core to their entire business. And so, it's a slippery slope. It's their [00:19:00] core young audience.

It's their future of their business. And they haven't figured out the non advertising business. And the various channels that they've tried, including AR, VR, Metaverse, you know, they're, they're, they're trying to build up the non advertising part of the business, but they haven't done it. And this is their, this is everything to them.

And so they're, they're doing everything they can. The walls are closing in on them.

David Sirota: Have there been other countries that have more successfully regulated Facebook or if not Facebook, other platforms and their use of data? What, if so, what has the experience been? How has Facebook? Uh, and companies like it navigated that have they gotten around them like, are the, I guess what I'm asking is, are there other examples where other governments have done a better job of regulating this?

Jason Kint: you know, I'd watch the EU closely. I think the distinction there, you know, the FTC has, because they're a U. S. based company, has, I think, more [00:20:00] access to full enforcement. And the Cambridge Analytica scandal, you know, kind of allowed the FTC to sit down and basically, you know, they were, Facebook had, the evidence was pretty bad, let's just say, and, you know, some of it's still coming out, frankly, um, including, you know, they had Mark Zuckerberg named in the complaint originally, which was deeply uncomfortable for him.

And so the FTC had the ability to get that settlement in a way that other jurisdictions can't, um, but the EU, you know, with GDPR in 2018, which they haven't really fully enforced. It's now playing out, and, and Meta's lost some very important decisions in the last year there. Germany as part of the EU had ruled back in 2019 that they could no longer share data between their apps.

Between Facebook, between Instagram, between WhatsApp, and across the web. And that, they've been appealing for four years now, and that, they've, they've lost the, that case, and now it's, it's playing out in the, in the local court again. But um, but it went all the way up to the Supreme Court, [00:21:00] essentially, of the EU, and they, they failed to get the decision they wanted.

So, I think, you know, META's got some limitations coming very soon in the EU too. And, um, and they've been talking about that on their earnings. They have significant headwinds, I think is the words they use in the EU for their data practices.

David Sirota: Okay, what do you say to folks who may be listening right now who say Sirota, Jason, like, what's the big deal here? Uh, Facebook collects data. I get. More targeted ads when I go Instagram, ads that help me identify products that maybe I am going to be more likely to be interested in. Why should I care about this?

Like, yeah, it's kind of, it's kind of skeevy how they use your data or whatever, but like, it's ultimately, it's not that big a deal in the grand scheme of things to be concerned about. What's your response to that?

Jason Kint: Well, I mean, most of their data comes from third parties. So there's that lack of control and you don't have any control in terms of where they're getting it from and how they're using it. And I think that should make [00:22:00] everybody uncomfortable. I think also we should flag that, you know, we're, at least I'm not the, you know, the core person at risk.

There's. There's people that are in different circumstances that have a lot more risk in having their data be collected, you know, in spots, shared, sold, et cetera, um, when they don't have any control over it. Um, they're just more vulnerable, frankly. And, and then there's all sorts of downstream harms that, you know, we could list out that all come from poor data practices.

And so the, you know, the way the platforms use that data to put ads in front of people, you know, in a micro targeted fashion or they suppress, you know, you've seen some of the stuff around elections and, and how people can be targeted and voter suppression. And there's all sorts of downstream harms when you don't really have control of your data.

There's also an economic piece that we're not talking about, but that, you know, their ability to collect that data across the Internet and use it however they want. Shifts welfare and [00:23:00] revenue from other parties that don't have any control over that. So, um, there's, you know, we could spend another half hour on it, but there's, there's a lot of documented harms from not having control over data.

David Sirota: In January, MEDA CEO Mark Zuckerberg is scheduled to be testifying before the Senate Judiciary Committee to answer questions about child harms on his platforms. Is this the first, is this the first time? Meta and Zuckerberg have had to publicly answer for these issues regarding kids. what do you think their response, his response to this stuff is going to be?

Jason Kint: You know, it's, it's, it's Zuckerberg's first time, I think, for hearing entirely focused on it. Another executive named Antigone Davis testified, and she's quite, uh, she comes up quite a bit in the AG's lawsuit. Because she testified on behalf of META last time after the Facebook whistleblower released a bunch of documents showing essentially that they they knew internally that there was a lot of harm and they weren't doing anything about it is [00:24:00] the way I would Describe it and Interestingly, I mean she said things like the Senator Klobuchar like we don't think about the actual value of a child, you know, we just don't think about it that way.

And then we saw evidence in the state agency's lawsuit that said 13 year olds are worth 270 lifetime value. Right? And so they had an actual lifetime value chart for kids. And so, you know, that's a different answer. And so I think you're gonna have the top of the company. There's a number of incidents like that where the CEO is gonna have to be asked very directly.

Your executive told us this. We've seen this evidence. What's the real answer? And that should be uncomfortable for Zuckerberg. He has children.

David Sirota: Last question for you. people listening who agree that this is problematic, are there things that they can do in their own, use of the internet? Uh, that reduces their participation in, [00:25:00] in this data harvesting beyond just shutting off the computer, shutting off the phone, never going on Facebook, never going on any of these, these platforms.

I mean, are there, are there little tricks that maybe you use or you've heard other people use to, to protect yourself at least a little bit from this, or is this just so ubiquitous that there's, there's, you're either, if the minute you turn on your computer, you're, you're already, you're already a victim.

Jason Kint: I mean, it is hard and that's why you're starting to see there's a bunch of state laws that have now rolled out and some are even starting to be enforced like in California, uh, Colorado, Connecticut, et cetera. Um, there are things that have been built into the products. Like you'll see on iOS, you'll see the choice of ask app not to be tracked and you can choose that.

So that's a choice being offered by Apple. There's global settings like in California. There's something called the global privacy control where you could say, I don't want anybody to collect my data unless I'm using their actual service. That's a nice intervention. It's a nice intervention. That's now playing out in a lot of states are copying it.

Just one button, one [00:26:00] click. I'm out. Don't, don't collect my data unless I'm actually choosing to use your service. Um, those are probably the biggest ones. And then, you know, back to the antitrust issue here is that there are certain services you don't have that choice, right? You can't, you can't choose not to use a Google service.

You cannot choose not to use an Amazon service. You can't choose not to use a Meta service. It's just not possible, right? Like, it's a, it's a deep inconvenience not to use one of those services in your life. And so, there's a heightened bar for those companies, and I think that's where, you know, following and paying attention to some of the antitrust lawsuits that are out there

matters.

David Sirota: Yeah, and I know I said my last question was my last question, but I just want to ask one quick follow up on that. The antitrust part. I, I, I, I assume that what you're referring to is the fact that Google has such a market share over, the products it offers. Search, uh, Gmail, et cetera, et cetera. Facebook has such a market share, uh, over, um, I guess advertising, social media and the like, I mean, I [00:27:00] guess what I'm asking is, is that what we're really talking about when we talk about monopoly, because I think sometimes people have difficulty understanding monopoly in this way.

It's easy to understand, uh, an energy monopoly, uh, your utility, you have one utility, you need to get power in your house. You go, you. You basically have typically one choice. That's a monopoly. It's a regulated utility. I feel like sometimes people see tech and, and, and they think, well, I don't have to use a search engine.

I can get a different email address than, than Gmail. I don't, I don't have to be on Facebook, right? I guess talk a little bit more about that point, about how these platforms really have grown into monopolies, monopolies that can't really be escaped.

Jason Kint: That's right. That's right. And especially when they're collecting data across third parties. And so, That's why you have lawsuits from nearly every state AG. You've got Justice Department suing Google in three different cases, or yeah, three, App Store, [00:28:00] Search, and Advertising. And you've got the Federal Trade Commission suing Meta for antitrust.

And, you know, I think a good example just from the, the one, the one that's actually in trial first was the Search trial against, by the Justice Department against Google. And I don't think the average person would understand that Google has 95 percent of the mobile search market. Much of it is because they pay the distribution points for exclusive access.

One of which is Android and Chrome. They pay themselves essentially because they don't need to. And then 37 percent we learned in the courtroom, 37 percent of all their search revenue on Apple goes to Apple. So when you're searching for something on an iOS device, 37 percent of the revenue that's being generated off of your searches is being paid back from Google to Apple.

It adds up to about 20 billion plus per year. And that's a piece of their 200 billion, you know, growing search business. And [00:29:00] so you're the product and they're making a lot of money off of everything you do on that device.

David Sirota: And I think that's a, that's an, a perfect way to put it. We are the product. They are not the product and we are, we are, our attention is what gets resold. Uh, it was where they, where they make their money. Jason Kent is a media strategist and the CEO of Digital Content Next. Jason, so much for walking us through this complicated topic.

Thanks for your time today. That was great.

Jason Kint: Thanks for having me. Appreciate it.

David Sirota: going

Frank Cappello: That's it for today's premium episode. Thank you again for being a paid subscriber to The Lever. We really couldn't do this work without you. if you like this episode, feel free to pitch into our tip jar.

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com to check out all of the incredible reporting our team has been doing. Until next time, I'm Frank [00:30:00] Capello. Rock the boat. The Lever Time Podcast is a production of the Lever and the Lever Podcast Network. It's hosted by David Sirota, our producer is me, Frank Capello, with help from Lever producer Jared Jacang Mayer.