FTC calls out Facebook, Whatsapp over privacy ahead of merger

Summary:Facebook might have its work cut out for it as it presses ahead with a multi-billion deal to buy the popular messaging service.

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Never mind the implications and vociferous debate over the Comcast-Time Warner merger .

Facebook might have its work cut out for it as it presses ahead with a multi-billion deal to buy the popular messaging service Whatsapp.

The Federal Trade Commission issued a pointed memo on Thursday, specifically addressing the two aforementioned social networking parties.

The independent agency, charged with protecting consumer rights, sternly reminded Facebook and Whatsapp about "about their obligations to protect the privacy of their users."

Facebook alone has more than a billion users worldwide. Whatsapp comes with roughly 450 million monthly users, a count that is said to be climbing exponentially to possibly outpace Facebook itself soon.

It is widely speculated that the Menlo Park, Calif.-based company is splashing down approximately $16 billion for Whatsapp in both a user-grab move while building out its own social media conglomerate and infrastructure .

In light of FTC charges against Facebook back in 2011, such concerns seem warranted. Facebook users themselves are usually very vocal about privacy rights, opt-in/out policies, and more amid each user interface upgrade and new feature introduced -- patterns that have only heightened in the wake of the NSA revelations last summer.

But bureau director Jessica Rich appeared more concerned about Whatsapp in the letter, vocalizing a concern that the startup might forget its responsibility to its loyal user base in the acquisition process.

Rich wrote:

We want to make clear that, regardless of the acquisition, WhatsApp must continue to honor these promises to consumers. Further, if the acquisition is completed and WhatsApp fails to honor these promises, both companies could be in violation of Section 5 of the Federal Trade Commission (FTC) Act and, potentially, the FTC’s order against Facebook.

Facebook announced its intent to purchase Whatsapp in February, much to the surprise of the tech world and beyond -- namely for the hefty price tag.

If approved, the deal is expected to close by the end of 2014, possibly as soon as August, based on the 8-K filing with the U.S. Securities and Exchange Commission.

Topics: Privacy, Apps, Mobility, Social Enterprise, Tech Industry

About

Rachel King is a staff writer for CBS Interactive based in San Francisco, covering business and enterprise technology for ZDNet, CNET and SmartPlanet. She has previously worked for The Business Insider, FastCompany.com, CNN's San Francisco bureau and the U.S. Department of State. Rachel has also written for MainStreet.com, Irish Americ... Full Bio

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