Recent Privacy Fines Remind Us Why We Need Web3

Microsoft is the latest tech giant to be charged after violating children’s privacy.

Quick take:

  • The FTC has asked Microsoft to pay $20 million to settle US charges for violating children’s privacy.
  • Meta was recently asked to pay $1.3 billion by the EU regulator over privacy violations. 
  • Web3 is a next-gen internet built on blockchain technology that prioritises user privacy and decentralisation.

The concept of a decentralised internet, popularly known as web3 is often brushed aside as a passing fad. However, even as funding in the space continues to trail last year’s levels, a surging interest from the world’s biggest technology companies paints a bright future for web3.

Recently, Amazon, Google and Alibaba have teamed with leading web3 startups to launch join products through their cloud computing units. 

But that is not the only evidence that web3 technology will continue to thrive despite the perception that investor optimism has relatively declined since the second half of 2022.

Web3 is described as an advanced version of the internet built on the blockchain, which prioritises user privacy, community ownership and decentralised applications.

Since gaming popularity in 2022, there have been several vertical sprouting within the space. One of the most interesting is decentralised IDs, which leverage the power of the zero-knowledge proofs to facilitate trustless communication between parties, whilst giving users the power and control over their information.

This type of communication protocol prevents user privacy from being exploited by centralised internet platforms that share data with third parties without the consent of their customers.

On Monday, the US Federal Trade Commission asked the tech giant to pay $20 million to settle charges for “violating the U.S. Children’s Online Privacy Protection Act (COPPA) by collecting personal information from children who signed up to its Xbox gaming system without notifying their parents or obtaining their parents’ consent, and by retaining children’s personal information,” Reuters reported.

The antitrust regulator also requires Microsoft to work on improving privacy protection for child users of its Xbox system.

This news comes barely two weeks after the tech giant’s US counterpart Meta Platforms was asked by the EU watchdog to pay a fine of 1.2 billion euros ~$1.3 billion over privacy violations.

Meta was charged with neglecting an order issued in 2021 by Ireland’s Data Protection Commission asking it to stop transferring user data from countries in the European Union and the European Economic Area to the US.

Meta’s President of Global Affairs Nick Clegg and Chief Legal Officer Jennifer Newstead said the company plans to appeal the case, preventing it from proceeding further.” This decision is flawed, unjustified and sets a dangerous precedent for the countless other companies transferring data between the EU and U.S.,” a statement on Meta’s website said.

Last week, Amazon found itself in the same boat, with the FTC fining the e-commerce giant $30.8 million for charges related to privacy violations. According to the FTC’s statement, Amazon was asked to settle $25 million for violating children’s by retaining their Alexa voice recording for infinite time periods.

The company also agreed to pay $5.8 million in consumer refunds for breaching users’ privacy by allowing employees or contractors access to private video recordings using ring cameras.

“For example, one employee over several months viewed thousands of video recordings belonging to female users of Ring cameras that surveilled intimate spaces in their homes such as their bathrooms or bedrooms,” the FTC noted. “The employee wasn’t stopped until another employee discovered the misconduct.”


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