As the situation goes on, there might be huge regulatory changes coming in 2021, which may change digital marketing and the way digital platforms operate. FTC recently launched legal action against Facebook for its antitrust breaches and now has announced a strict investigation into how these big social media platforms gather and use the user data, with the main focus on how the data practices have impacts on teens and children.

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Explanation By FTC

The FTC is issuing ordersunder Section 6(b) of the FTC Act, which authorizes the Commission to conduct wide-ranging studies that do not have a specific law enforcement purpose. The orders are being sent to Amazon.com, Inc., ByteDance Ltd., which operates the short video service TikTok, Discord Inc., Facebook, Inc., Reddit, Inc., Snap Inc., Twitter, Inc., WhatsApp Inc., and YouTube LLC. The companies will have 45 days from the date they received the order to respond.

The investigation seems to get a general understanding of how social media platforms gather and use user data, not for a particular case. The next steps might involve FTC putting new restrictions on the collection of data and its usage specifically for the younger users. The biggest shift in the aspect so far has been the introduction of the GDPR in Europe which focuses on providing EU citizens the authority to control how their private data is used which therefore has urged many companies to change their processes.  FTC is more particularly looking at how such usage could affect younger users.

Taxation

Additional benefits may include that each company will have to establish a local base and therefore be subject to local taxes. All of the big platforms minimize their tax obligations where they can by utilizing lower-cost nations to house their local data centers and operations – like in Australia, Google and Facebook only pay a fraction of a regular business’ tax obligations through clever accounting.

Explanation By The Australian Financial Review:

Google and Facebook report less than a fifth of their Australian-sourced income as local sales; and they pay no GST on most of that. While Google and Facebook had estimated Australian sales of $7.4 billion in the year to December, Google and Facebook reported local sales of only $1.4 billion as taxable, representing a $6 billion tax break.

Conclusion

The investigation by the FTC may provide more insights on how the major platforms gather and utilize user data and if the investigation reveals concerning issues or trends then, it will be applied to all the nations which will therefore lead to a huge momentum for restrictions on data usage.