On Tuesday, October 5th, Facebook whistleblower Frances Haugen testified before a Congressional Subcommittee, detailing the harms perpetuated by the tech giant. These include, but are not limited to, valuing profit over the safety of users, targeting children through the Instagram platform and amplifying the January 6th Capitol Hill attack. Ms. Haugen also claimed that Facebook has repeatedly broken U.S. securities law, lying to investors on multiple occasions. As of today, Ms. Haugen has filed eight separate complaints with the Securities and Exchange Commission (SEC). 

In a previous post, we discussed the employment law and trade secret implications of the Facebook whistleblower hearing, including the importance of non-disclosure agreements in whistleblowing. In part two, we will highlight the impact of the Facebook hearing on data privacy and safety.

Are There Really Privacy Repercussions from the Facebook Whistleblower Testimony?

Ms. Haugen’s testimony called for increased regulation and oversight of Facebook to increase privacy and safety on the platform. She testified that “almost no one outside Facebook knows what happens inside Facebook” - which, for many tech companies, is the goal and their competitive advantage.  Specifically, she called for the creation of a separate regulatory agency that would have oversight over Facebook, instead of the current oversight board that holds no real power over the platform, according to Ms. Haugen’s testimony.

This testimony poses a considerable risk not only to Facebook, but to all major social media companies. Christopher Ott, partner at Rothwell Figg, explains further.

“Regulators generally review potential privacy abuses under the Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) standard. While this standard is flexible, it is not always easy to apply in privacy actions. A major risk for companies like Facebook is that Ms. Haugen’s testimony may establish a certain ‘corrupt’ knowledge that will help a regulator articulate cases under the UDAAP. Ms. Haugen has therefore increased their privacy regulatory risk,” he said.

Following last week’s hearing, lawmakers such as Sen. Amy Klobuchar (D-MN), Sen. Marsha Blackburn (R-TN) and Sen. Ed Markey (D-MA) called for improved privacy regulations. However, Ms. Haugen said she doesn’t believe regulating privacy goes far enough.

“Facebook wants to trick you into thinking that privacy protections or changes to Section 230 alone will be sufficient,” said Ms. Haugen. “While important, they will not get to the core of the issue, which is that no one truly understands the destructive traits of Facebook except for Facebook. We can afford nothing less than full transparency.”

One of the key facets of Ms. Haugen’s testimony was Facebook’s internal research showing Instagram was negatively impacting teens’ mental health. Ms. Haugen alleged that Facebook puts profits over its users’ safety, favoring growth over moderating content that could be harmful.

“It is clear from Haugen’s revelations that Facebook is using the personal information it collects to target users’ strong emotions,” said Rachel Miller, Director of Marketing Communications at Permission.io and former privacy specialist at TikTok. “This is a tactic to keep them essentially captive to the platform. Since the algorithm favors content that receives higher engagement, sensational content that sparks reactions (such as panic-inducing disinformation or content that promotes body image issues) will likely travel much further, reaching more eyes.”

Following Ms. Haugen’s testimony, more lawmakers are calling for increased regulation and oversight of Facebook. 

What is Congress’ Response to the Facebook Whistleblower Testimony?

As the debate around data privacy continues, lawmakers are exploring a variety of new strategies for reining Facebook in. "Congress will continue to deliberate on data privacy legislation," said Christian Fjeld, Vice President of ML Strategies at Mintz. "While lawmakers agree on many issue areas, there remains a gulf on thornier issues, such as preemption and enforcement.  It remains to be seen if these differences can be overcome to get a bill across the finish line."

Section 230 of the United States Communications Decency Act (CDA or Section 230) is one likely target for reform. Currently, Section 230 provides social media and other internet platforms, including fringe sites, immunity from illegal or harmful content published by third parties. Should lawmakers choose to amend the Act, it may allow for private U.S. citizens to sue Facebook if their algorithms allow this type of content to flourish or create some other demonstrable harm.

“Legislators may very well be motivated by Ms. Haugen’s testimony to limit the immunity from civil suits,” said Rothwell Figg partner Steven Lieberman. “To the extent that Facebook’s behavior appears to depart more and more from the traditional role of an entity that does no more than provide a medium for the posting of information by third parties, the reasons for the immunity provided by the CDA become far less compelling.  That would potentially expose Facebook to a wide variety of civil suits by persons allegedly harmed by speech on the Facebook platform.”

Lawmakers also discussed the possibility of new national privacy legislation, paving the way for broad litigation against the company. New legislation might also take the form of strengthened child safeguard laws, which would require stricter filters of the content that minors are exposed to or prevent social media platforms from advertising directly to children. Though, at this moment, the formation of a new regulatory agency seems unlikely.

"I’m not sure a new regulatory agency is in the cards, because many policymakers think the Federal Trade Commission is the appropriate agency to police social media platforms," said Mr. Fjeld. "However, a change in federal law may be in the making.  Both Democrats and Republicans have expressed a willingness to amend section 230 of the Communications Act, albeit for different reasons, and that could have a meaningful impact on social media platforms and their users."

In any case, it appears that Congressional Republicans and Democrats share the notion that something must be done. “In what is currently an extremely polarized Congress, Democrats and Republicans seem to be agreeing that some sort of reform must occur, making this one of the first bipartisan issues in some time,” said Ms. Miller. “This illuminates how problematic Haugen’s revelations are for democracy as a whole.”

"If you closed your eyes, you wouldn't know if it was a Republican or a Democrat," said Subcommittee Chair Richard Blumenthal on the matter. "Every part of the country has the harms that are inflicted by Facebook and Instagram."

What is the Impact of the Facebook Whistleblower Report?

Ms. Haugen’s testimony is one of the most devastating blows to Facebook yet. And while the company rebuked Ms. Haugen’s testimony on Facebook’s internal research as being taken out of context, Facebook is under more scrutiny than it’s ever been, prompting lawmakers to act. 

Additionally, Ms. Haugen passed the documents she took from Facebook to federal and state regulators. However, it remains to be seen whether they will take decisive action against Facebook.

“The documents Haugen leaked as well as her testimony show that Facebook is well aware of [the problem], and chooses to capitalize on it,” said Ms. Miller. “The insecurities of its users are valuable and profit-generating to them. This sparks concerns for data privacy, of course.”

Read more on the whisleblower implications of Frances Haugen's testimony here.

Read more on the trade secret implications of her testimony here.

Rachel Popa also contributed to this article.