Federal Court rules against Facebook on Cambridge Analytica appeal

Joseph Brookes
Senior Reporter

Facebook has lost its Federal Court appeal against a ruling that it is breached privacy laws by tracking Australian users and failing to protect the data. The American tech giant had claimed its global structure meant it was not carrying out business in Australia or holding Australian’s personal information when it allegedly failed to protect the data of more than 311,000 users.

On Monday the full bench of the Federal Court dismissed Facebook Inc’s appeal, upholding an earlier ruling and ordering the company to pay the Australian Information Commissioner’s legal costs.

The privacy watchdog has been granted leave to serve legal documents on the US-based entity, and continue its case against the company.

Image: Twin Design / Shutterstock.com

The case stretches back to the Cambridge Analytica scandal when users’ information was harvested by a Facebook developer’s app, ultimately being used in political profiling.

The personal information of 311,127 Australian users was collected and misused by the developer, according to Australia’s privacy regulator.

The watchdog sued Facebook in March 2020, alleging it breached privacy law by misusing and failing to protect the users’ personal information. The Commissioner subsequently applied for and obtained leave to serve the initiating court documents on Facebook Inc and Facebook Ireland.

In September 2020, the Federal Court dismissed Facebook Inc’s call to have the case thrown out based on its global structure – Facebook Inc in the US and Facebook Ireland for international users. Facebook Inc argued this lack of physical presence for the US firm meant it had not technically conducted business in Australia or collected and held personal information in Australia at the time of the breach.

The Federal Court dismissed this argument later in 2020 and Facebook appealed.

On Monday, the full bench of the Federal Court dismissed the latest appeal, paving the way for the Information Commissioner to serve legal documents to the US entity and continue its case of alleged privacy law breaches.

In a statement, the Commissioner welcomed the latest ruling.

Facebook has been granted leave to appeal again.

In their ruling, Justice Allsop and Yates said they did not accept several of the American firm’s arguments, including a lack of physical presence meant it was not conducting business in Australia.

The judges also disagreed with Facebook’s “radical” argument that it was merely transmitting digital signals across jurisdictions, much like sending a letter, and the business was not actually being conducted in Australia.

“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,” Justice Allsop and Justice Yates said in their judgement.

“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.”

Facebook has been contacted for comment.

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