A Record Breaking Settlement Ever For Privacy Rights! Meta To Pay $1.4 Billion To Texas Over Using Facial Recognition Feature Without Authorization

Meta, the parent company of Facebook, and also owns Instagram and WhatsApp, has to pay a hefty amount of $1.4 billion to Texas over a lawsuit filed by Attorney General Ken Paxton in 2022, claiming that Meta had been using facial recognition technology on photos uploaded by users on Facebook without any permission and violating the privacy.

The lawsuit filed by Texas alleged Meta for using the biometric data of millions of users uploading photos and videos to their social media accounts in a “Tag Suggestions” feature.

Paxton mentioned that this settlement is the largest ever obtained by a single state. Meta has agreed to the settlement but has not accepted any wrongdoing.

A Meta spokesperson Chris Sgro said, “We are pleased to resolve this matter, and look forward to exploring future opportunities to deepen our business investments in Texas, including potentially developing data centres.

Meta will pay the settlement in five years. The first installment of $500 million will be paid to the state in a month, while next installments of $225 million will be paid from 2025 to 2028 annually.

Meta’s facial recognition practices

Meta brought a new feature in 2011, known as “Tag Suggestions” to make users tag people in their photos. The feature had been turned on by default, according to Paxton’s office.

This feature used facial recognition software to gather data, protected by the 2009 law.

The 2009 state law aimed to protect Texans’ biometric data such as fingerprints and facial scans.

It mandates that if any businesses want to collect such data, first have to grant permission from the users. Additionally, the law put certain restrictions like sharing the data, with exception to contributing in law enforcement or financial transactions. Businesses are also required to keep this data safe and destroy it completely in a year after it is of no use.

In 2021, Meta made an announcement on Facebook, citing “growing concerns about the use of this technology as a whole,”

Also, claimed that it had deleted facial recognition data of over 1 billion people.

However, Paxon said in a statement, “Unbeknownst to most Texas, for more than a decade Meta ran facial recognition software on virtually every face contained in the photographs uploaded to Facebook, capturing records of the facial geometry of the people depicted.”

Thus, violating the state’s Capture or Use of Biometric Identifier Act (CUBI) and the Deceptive Trade Practices Act and Consumer Protection Act.

Record-breaking settlement

Tech Giant Meta to pay $1.4 billion to Texas is the record breaking settlement from an action brought by a single state and also, biggest state governmental privacy settlement in history.

The settlement surpassed the $650 billion payment made by Meta in 2021 to Illinois over similar biometric privacy concerns.

These settlements indicate that the companies should be extremely careful while, using the biometric data for their own benefit, and without permission of the users.

Texas laws

From the settlement of 1.4 billion, it is clearly seen that Texas laws are strict for businesses if it violates their citizens’ privacy and holds them accountable for misusing data.

Texas’ biometric privacy law called the Capture or Use of Biometric Identifier Act (CUBI), imposes penalties of up to $25,000 for a violation.

During Covid-19 pandemic, Texas led an antitrust lawsuit against Google which was joined by 15 other states. It claimed that Google was involved in anti-competitive practices in the digital advertising industry. It is expected to go for trial in court in 2025.

Additionally, Texas participated in a different lawsuit regarding Android app distribution and payment procession. It focused on how Google regulated its app stores and transactions, which many found unfair, resulted in a settlement of $700 million.

Moreover, Google agreed to pay $8 million to Texas over deceptive advertisements being used to promote the Pixel 4 smartphone last year.

Implications for Meta

Meta has reported a profit of $12.37 billion in the January-March period of financial year 2024 and settlement of $1.4 billion will shake the financial stability of the company.

Also, allegations after allegations on the same thing, privacy, significantly impact the image of the company and users don’t trust. Like, in 2019, Facebook agreed to pay $5 billion to U.S. Federal Trade Commission over the usage of facial-recognition technology while, in 2023, the European Union fined Meta to pay $1.3 billion under General Data Protection Regulation for violating the privacy laws by transferring the data collected from Facebook users in Europe to the United States.

The settlement of 1.4 billion is a clear message for those companies that deal in data collection practices of users that the government can grant a penalty and take legal action, if things go wrong.