German consumer groups sue WhatsApp over privacy policy changes

The Federation of German Consumer Organizations wants WhatsApp to stop passing users' contact lists to its parent company, Facebook

WhatsApp's privacy policy change allowing Facebook to target advertising at its users has landed the company in a German court.

The Federation of German Consumer Organizations (VZBZ) has filed suit against WhatsApp in the Berlin regional court, alleging that the company collects and stores data illegally and passes it on to Facebook, the federation said Monday.

Facebook acquired WhatsApp in October 2014, but it wasn't until August 2016 that WhatsApp said it would modify its privacy policy to allow it to share lists of users' contacts with Facebook. The move made it possible to match WhatsApp accounts with Facebook ones where users had registered a phone number, giving the parent company more data with which to make new friend suggestions and another way to target advertising.

Of particular concern to VZBZ is the way that WhatsApp transfers numbers from its users' contacts lists to Facebook -- even when those numbers are not WhatsApp users. The federation wants the companies to stop transferring such information, and to delete any already transferred. It is also objecting to eight clauses in WhatsApp's revised terms of use, including one allowing WhatsApp to provide users with advertising materials from the rest of Facebook without their consent.

The policy changes have also landed WhatsApp in hot water elsewhere.

Within days, privacy campaigners including the Electronic Privacy Information Center and the Center for Digital Democracy complained to the U.S. Federal Trade Commission, accusing the companies of unfair and deceptive trade practices.

The city of Hamburg was first to rule against the companies, ordering Facebook in September to stop collecting data about WhatsApp users and to delete any data it had already gathered.

In October, European Union privacy watchdogs asked the companies to end the data transfers while they investigated whether they needed additional user consent to comply with EU privacy laws.

The following month, the U.K.'s Information Commissioner said the company had agreed to stop the data sharing until it had obtained users' consent.

There's even concern that the data transfer may have breached antitrust law. In December the European Commission said it was investigating concerns that Facebook had intentionally or negligently submitted incorrect or misleading information to antitrust regulators in the run-up to its acquisition of WhatsApp. Back then, the company told regulators that the phone number matching now being done could not be performed reliably. If the Commission concludes regulators were misled, it could fine the company 1 percent of worldwide revenue.

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