By Tolu Olarewaju and Jagannadha Pawan Tamvada
Meta, the parent company of Facebook, Instagram and WhatsApp, was recently hit with three fines totalling more than US$290 million in Nigeria.
The fines were imposed by Nigeria’s Federal Competition and Consumer Protection Commission, 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.
Entrepreneurship and
international business researcher Tolu Olarewaju and professor of
entrepreneurship Jagannadha Pawan Tamvada explain the implications of the
fines.
What
are the violations for which Meta got 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. And 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 active 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 currently offers stronger privacy protections in
the European Union due to 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 like 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 US$220 million fine along with penalties from other agencies, bringing the total to US$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 estimated annual revenue
in Nigeria is between US$200 million and US$300 million. However, 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 US$1.4 billion fine in
Texas and a US$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 more strictly to
local data protection and consumer rights laws. This includes appointing a Data
Protection Compliance Organisation and submitting mandatory audit reports as
stipulated by the Nigerian Data Protection Regulation.
The three 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 US$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
- - revert to the data sharing practices adopted in
2016, including establishing an opt-in screen
- - terminate the tying and transfer of data without
consent
- - 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’s 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 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 grow significantly.
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 like Facebook and Instagram. While none match
their scale, platforms like 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 due to increased internet access and mobile usage.
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