The Federal Trade Commission reached a $5 billion settlement with Facebook. (Photo by LOIC VENANCE / ... [+]
The U.S. Federal Trade Commission reached a record-setting $5 billion settlement with Facebook this week, according to a new Wall Street Journal report. The settlement is the result of an investigation launched after the company’s 2018 Cambridge Analytica privacy scandal into whether Facebook violated a 2011 FTC consent decree that required the company to give customers clear notice and obtain expressed consent before sharing their information with third-party vendors.
The settlement dwarfs the FTC’s largest penalty to date against a tech company over privacy issues, a record formerly held by the $22.5 million settlement reached with Google in 2012. It also brings U.S. regulators into the same realm as the E.U., which has levied billions of dollars in fines against major tech companies in the recent past.
Facebook and the FTC declined to comment.
Facebook’s stock price surged to its highest price in nearly a year following reports of the fine. One silver lining for investors: The settlement represents less than a quarter of Facebook’s annual profit and does not require Facebook to break up its other products, Instagram and WhatsApp.
The battle between Facebook and U.S. regulators started in March 2018 when the FTC opened an investigation into Facebook’s privacy practices after the social network admitted political ad targeting firm Cambridge Analytica acquired detailed personal information of more than 87 million Facebook users through an academic researcher. The incident sparked a global debate about Facebook’s privacy practices — and raised more concern when it was revealed that Facebook knew about the privacy issue as early as 2015.
CEO Mark Zuckerberg vowed to treat users’ data with more care after the Cambridge Analytica revelations. Yet concerns about Facebook’s handling of the personal information of its 2 billion-plus users haven’t dissipated. Researchers in April discovered that troves of user information were inadvertently posted in plain text on a public Amazon cloud server, highlighting the wide distribution of Facebook user data.
It remains unclear whether additional restrictions will be included in the settlement. Democratic lawmakers have called for Zuckerberg to be held personally liable for the company’s privacy violations. The Wall Street Journal reports that the FTC settlement was approved on a 3-2 vote with Republicans in support of and Democrats against it, suggesting that the fine will be the most consequential part of the agreement.
