Nigeria slaps Meta with $290m in fines for invasive practices

Daily Maverick

2 days ago

Found guilty of data sharing and other invasive practices, the parent company of Facebook, WhatsApp and Instagram was issued with a $290-million penalty.
Meta, the parent company of Facebook, Instagram and WhatsApp, was recently hit with three fines totalling more than $290-million in Nigeria. The fines were imposed by Nigeria's Federal Competition and Consumer Protection Commission, the Nigerian Data Protection Commission and the Advertising Regulatory Council of Nigeria.
Meta was accused of invasive practices against data subjects and consumers in Nigeria. The company denied the allegations and has challenged the fines in court.
What are the violations for which Meta has been fined?
The trouble began on 4 January 2021 when WhatsApp updated its privacy policy to introduce mandatory data-sharing with Facebook (now Meta) and its subsidiaries. The main change allowed WhatsApp to share user business interaction data with Facebook for marketing and advertising purposes.
The updated policy did not include an opt-out provision. It was a 'take it or leave it' policy. In other words, if users did not consent to the updated terms, they would no longer be able to use WhatsApp. This triggered a Federal Competition and Consumer Protection Commission investigation into Meta, conducted jointly with the Nigeria Data Protection Commission. The probe was conducted from May 2021 to December 2023.
Meta has allegedly not complied with the Nigeria Data Protection Commission, and failed to appoint a Data Protection Compliance Organisation. That's an entity licensed to assist data controllers and processors in achieving compliance with Nigeria's data protection regulations. It has not submitted its mandatory Nigeria Data Protection Regulation reports for two consecutive years.
Nigeria is the most populous country on the continent, with about 236 million people. It has about 107 million internet users. The most used social media platforms at the end of 2024 were WhatsApp, Facebook, TikTok, Instagram and Telegram.
Meta owns WhatsApp, Facebook and ­Instagram and has threatened to pull Facebook and Instagram services from the country.
The Federal Competition and Consumer Protection Commission has said quitting Nigeria won't absolve Meta of its liability.
Facebook has about 51.2 million users in Nigeria, while Instagram has about 12.6 million.
What have regulators found against Meta?
The investigation uncovered several violations. These included:
Unauthorised data sharing: Meta was found to have shared Nigerian users' personal data without their consent. This included cross-border transfers and storage, violating the Nigeria Data Protection Commission and the Federal Competition and Consumer Protection Act.
Discriminatory practices: Meta allegedly treated Nigerian users differently from those in other jurisdictions with similar regulations. Meta offers stronger privacy protections in the European Union because of the General Data Protection Regulation. Nigerian regulators have highlighted this double standard.
Denial of data self-determination: The company was accused of denying Nigerian users the right to control how their data is used, compelling them to accept exploitative privacy policies.
Abuse of market dominance: The Federal Competition and Consumer Protection Commission said the company abused its dominant market position to enforce unfair privacy policies.
Tying and bundling: Meta was found to have engaged in tying and bundling practices, which are considered anti-competitive. Tying occurs when a company requires customers to buy a secondary product or service as a condition of buying a primary product or service. For example, if Meta required users to accept Facebook's terms and automatically enrol in WhatsApp or Instagram services (or allow data sharing across them) to use Facebook, then that could be considered tying. This is because it can limit consumer choice, stifle competition and force people to accept products or terms they don't want.
Bundling occurs when a company sells multiple products or services together as a package, or makes it difficult to buy them separately. For example, Meta might bundle multiple services such as Facebook, Instagram and Messenger in such a way that users must accept a single privacy policy that covers all, even if they only use one service. This can shut out smaller competitors and prevent users from choosing alternatives.
After remediation efforts failed, the Federal Competition and Consumer Protection Commission issued its final order in July 2024. It imposed a $220-million fine along with penalties from other agencies, bringing the total to $290-million.
In addition to the fine, the commission has ordered Meta to comply with Nigerian laws and cease practices it described as the 'exploitation' of Nigerian consumers.
After completing its inquiry, the agency shared its findings with Meta. The company proposed a 'remedy package'. But the commission rejected this as inadequate.
What made Meta vulnerable to such fines?
Meta has failed to localise its data practices. It appears dismissive of Nigerian sovereignty and regulatory authority. For example, Meta has been transferring Nigerian users' data overseas without protecting them as required by Nigeria. Meta's annual revenue in Nigeria is between $200-million and $300-million. But many Nigerians in the diaspora use Facebook and Instagram to communicate with people inside the country. Revenue from those users is likely to raise the figure considerably.
The company has faced similar sanctions for data violations worldwide, including a $1.4-billion fine in Texas and a $1.3-­­billion fine in Europe.
It has also been penalised in India, South Korea and Australia.
What are the implications of the fines?
Meta now faces heightened scrutiny from Nigerian regulators. It will have to adhere to local data protection and consumer rights laws. This includes appointing a Data Protection Compliance Organisation and submitting audit reports as stipulated by the Nigerian Data Protection Regulation.
The fines and regulatory measures may also compel Meta to reassess its operations in Nigeria. It might adjust its services to align with local laws.
Meta has also been ordered by the courts to reimburse the Federal Competition and Consumer Protection Commission $35,000 for the cost of the investigation. And it has been told to take the following measures:
Reinstate the rights of Nigerian users to determine the control and use of their data without losing functionality or deleting the application;
Set its privacy policy to comply with data protection laws in Nigeria;
Stop sharing WhatsApp users' information with other Facebook companies and third parties until users have actively consented to this;
Revert to the data sharing practices adopted in 2016, including establishing an opt-in screen;
Terminate the tying and transfer of data without consent; and
Add a visible link on its platforms for Nigerian users, leading to educational content about the risks of manipulative and unfair data practices. These videos will be developed in collaboration with approved NGOs and academic institutions.
Other social media entities operating in Nigeria will be watching closely to see what is required.
How dependent is Nigeria on these social media platforms?
Many Nigerian businesses and entrepreneurs use Facebook and Instagram for marketing, customer engagement and sales. The platforms offer cost-effective advertising and direct communication channels with many customers.
These platforms also provide valuable analytics on customer behaviour, content performance and demographics. Businesses use these services to refine their marketing strategies and make data-driven decisions.
Content creators in Nigeria use Facebook and Instagram to build audiences, monetise content and collaborate with brands. The African creator industry, valued at £2.4-billion in 2024, is expected to continue to grow significantly.
The music genre Afrobeats has also gained popularity across Nigeria and globally with the assistance of these platforms.
Nigeria's ecosystem of homegrown and African social media platforms is growing, offering local alternatives to global giants such as Facebook and Instagram. While none match their scale, platforms including Crowwe, ChatAfrik and Nairaland are making strides in content sharing, chat, forums and business promotion.
The information and communications technology sector contributed about 20% to Nigeria's real gross domestic product in the second quarter of 2024. The rapid expansion of the digital technology industry in recent years highlights its strong potential to stimulate economic growth.
Nigeria's digital economy has also seen significant growth because of increased internet access and mobile usage. DM
First published by The Conversation.
Tolu Olarewaju is an economist and lecturer in management at Keele University. Jagannadha Pawan Tamvada is a professor of entrepreneurship at Kingston University.