Meta files suit to kneecap the FTC

Meta is suing the Federal Trade Commission, challenging the constitutionality of its in-house enforcement powers in a bid to stop the agency from unilaterally changing the terms of a 2020 privacy settlement.

The tech giant argued in its suit filed late Wednesday that the agency has “structurally unconstitutional authority” in how it enforces cases against companies through its in-house administrative court.

On Monday, Meta lost a bid to bar the FTC from reopening a 2020 enforcement order against the company, in which the agency accused Meta of privacy violations against children. Meta filed an appeal to that decision on Tuesday. Meta is also seeking to pause the FTC’s case while its lawsuit and appeal play out.

As part of its 2020 settlement Meta paid a $5 billion fine and agreed to make major changes to its privacy practices.

“The FTC’s unilateral attempt to rewrite our privacy settlement agreement raises serious and important issues about the FTC’s constitutional authority and Meta’s due process rights,” Chris Sgro, a Meta spokesperson, said in a statement. “Monday’s ruling did not reach those issues and the Judge suggested that Meta raise them in a separate suit. The FTC shouldn’t be the prosecutor, judge, and jury in the same case.”

The FTC declined to comment.

The claims: The FTC is able to handle enforcement through two methods: By filing a lawsuit through a federal court, or bringing its case directly to a company through its “administrative process,” a structure created by Congress in the FTC Act of 1914.

Companies facing these in-house cases can either settle the charges or challenge the complaint with an administrative law judge, where the FTC commissioners vote on a final decision. At that point companies can appeal in a federal appellate court of their choice.

Meta’s lawsuit argues that this structure is unconstitutional and violates its due process rights, claiming that it allows the FTC to be both the prosecutor and the judge in its enforcement.

Echoing past complaints: Other companies have made similar arguments in the past to restrict regulatory agencies.

On Wednesday, the Supreme Court heard arguments on a challenge to the Securities and Exchange Commission’s authority to enforce federal laws, and the Consumer Financial Protection Bureau also faces similar legaltests of its authority.

Illumina, the gene sequencing equipment maker, also has a pending challenge to the FTC’s in-house court as it defends its takeover of cancer test-maker Grail. A decision on that is pending in the U.S. Court of Appeals for the Fifth Circuit.

In April, the Supreme Court ruled against the FTC, saying defendants can bring constitutional challenges to the agency’s administrative enforcement authority prior to resolving the underlying case. In that case, the FTC dropped its challenge to the merger of two police equipment-makers, rather than litigate whether its procedures are constitutional.