Australian court orders Meta subsidiaries to pay $14 million over data use

Adverts said Onavo Protect user data would be kept a secret – just didn't say from whom

On Wednesday, Australia's Federal Court ordered two Meta subsidiaries to pay $14 million after an over two and a half year legal battle instigated by the country’s competition regulator found the pair misled users on the data collection of a now defunct VPN app.

The Zuckerberg companies were ordered to pay $20 million Australian dollars ($13.5 million) in fines to the Commonwealth of Australia and over AU$400,000 ($270,000) in court costs to the Australian Competition and Consumer Commission (ACCC).

Israel-based web analytics company Onavo, maker of free downloadable software application Onavo Protect, was acquired by Facebook in 2013. The narrative from Onavo at the time was that privacy was king. Meanwhile Facebook promised the company would be a separate brand.

But by 2018, researchers were onto the tall tale and found Onavo Protect sent user data to Facebook even when turned off – a situation that was outlined and permitted through its terms and conditions.

According to the ACCC, information collected and aggregated included "users' internet and app activity, such as records of every app they accessed and the number of seconds each day they spent using those apps" for Facebook's commercial benefit.

Onavo Protect soon became harder to download. Apple's App Store forbade apps from collecting data on the usage of other apps in 2018, thus forcing Facebook to pull Onavo Protect from its digital shelves. Google Play followed suit when it banned Android VPN apps it held from interfering with ads in 2019.

On Wednesday, the Australian court said that Onavo Inc. and Facebook Israel promoted the VPN during 2016 and 2017 without sufficiently disclosing that data would be used outside of the app.

"If an Australian user of Onavo Protect had a Facebook account, Meta was also able to combine that user's Onavo Protect Data with information that Meta maintained about the user's Facebook account, using an algorithm," wrote Judge Wendy Abraham.

She further noted that internal Meta documents referred to Onavo Protect as a "business intelligence tool," providing "a sample of users who we are able to know nearly everything they are doing on their mobile device." The data was then used for advertising, marketing and improvement of products, services and strategies.

According to the Australian court, the terms and conditions disclosing data use were not sufficient enough to counter advertisements to the contrary. Court documents state that both Facebook Israel and Onavo admit that ads and statements were likely to mislead or deceive.

Meta told The Register:

The ACCC acknowledged in the joint filing that the Onavo Protect listings were not deliberately misleading and disclosures were made in the app's Terms of Service and Privacy Policy. Furthermore, all user data was anonymized and aggregated before it was used by Meta.

The Onavo Protect app did provide users with a free, useful VPN service and it did function properly as an online security tool. There was no allegation by the ACCC that the app did not function properly as an online security tool."

Meta told The Register that Facebook Israel and Onavo jointly proposed the penalty to the court, which it approved.

Abraham said in court documents the fine "carries with it a sufficient sting to ensure that the penalty amount is not such as to be regarded by the parties or others as simply an acceptable cost of doing business."

Last year Meta made $116 billion globally, meaning the $14 million penalties represent roughly 4.4 percent of what the social media kraken pulled in during a typical day. ®

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