Privacy Commissioner case against Facebook to proceed as judges reject appeal

Federal Court case to proceed after judges uphold former ruling that Facebook was conducting business in Australia at the relevant time

The Australian Information Commissioner has progressed a step further in its quest to pursue Facebook for breaches of Australian privacy law after the Federal Court rejected the social media giant’s appeal against a ruling to continue proceedings.

The appeal was lodged by Facebook against an earlier ruling by Justice Thawley of the Federal Court made in September 2020, which granted the Australian Information Commissioner leave to serve legal documents on the company.

Initial proceedings kicked off in March 2020 when the AIC filed proceedings against Facebook Inc and Facebook Ireland alleging the platform committed serious and/or repeated interferences with privacy in contravention of Australian privacy law.

The privacy breach allegations stem from the Cambridge Analytica scandal, which saw the personal data of more than 300,0000 local consumers potentially disclosed to the disgraced data analytics company for political profiling. The breaches are alleged to have occurred between March 2014 and May 2015.

Globally, the personal details of up to 87 million people were collected by Cambridge Analytica and potentially used for purposes outside their consent.

In their judgment on 7 February 2022, Chief Justices Allsop, Perram and Yates dismissed an appeal by Facebook against the original judgment in September 2020, which had found Facebook to be carrying on business in Australia and holding personal information on Australian consumers at the relevant time. The trio also ordered the social media company to pay all appeal costs, paving the way for proceedings to go ahead.

In its appeal, Facebook had attempted to argue that because information was not collected, held or manipulated physically in Australia, nor were operations onshore, it was not conducting business here. This argument had been dismissed by Justice Thawley, who argued the nature of Facebook’s and its use of cookies and APIs indeed counted for operating business in Australia at the relevant time and agreed the Commissioner had made a sufficient case for proceedings to continue.

“The problems with this submission are first that it proves far too much, and secondly that it is, with respect, divorced from reality,” the justices stated in their latest judgment on 7 February 2022. “It proves too much because it has the consequence that no computer-based activity in one jurisdiction can ever amount to more than an effect in computers located in another. The submission has the result that no Internet business based in one jurisdiction can ever carry on business in another.

“The error is the failure to account for the reality of what the signals and effects constitute.

“Whilst Facebook Inc’s description of what is occurring is not wrong, it is pitched at such a high level of generality that it is, in my respectful opinion, useless as a tool of analysis. One might also say that Facebook Inc had done no more than turn on and off vast numbers of tiny switches – a true statement since all computers operate solely by switching on and off binary digits – but the statement, whilst true, is not helpful for grasping anything about the activities which Facebook Inc is actually engaged in. By parity of reasoning, one learns little about art history by observing that Rembrandt’s The Night Watch consists of some pigments on canvas in a wooden frame.”

The Privacy Commissioner, Angelene Falk, welcomed the Federal Court’s decision and said her office would continue to move forward with the case and looked forward to the hearing of substantive matters.

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