FTC Approves Record $5 Billion Settlement With Facebook

The settlement easily surpasses the FTC’s largest penalty to this point — a $22.5 million fine against Google in 2012

Last Updated: July 12, 2019 @ 2:04 PM

The Federal Trade Commission has approved a record-setting $5 billion settlement with Facebook, after the social network has come under fire for several data privacy issues in the last 18 months, according to multiple reports.

The Wall Street Journal was the first outlet to report the news, and the Washington Post followed soon after.

Facebook declined to comment when reached.

The settlement comes after the FTC opened a probe into the company following its Cambridge Analytica data leak last year, where up to 87 million users had their profiles unwittingly accessed by the political consulting firm.

The firm paid University of Cambridge professor Aleksandr Kogan for data on the personality makeup of millions of Facebook users leading up to the 2014 midterm elections; Cambridge Analytica was later contracted by the Trump campaign in 2016 to help target potential voters  — pulling in $15 million in the process.

The settlement was approved 3-2 along party lines, with the commission’s three Republicans in favor of it, while its two Democrats opposed it. The $5 billion agreement easily surpasses the FTC’s largest penalty to date — a $22.5 million fine against Google for covertly circumventing Safari privacy settings in 2012.

Facebook had anticipated the hefty fine, with the company setting aside about $3 billion during the first quarter as the FTC continued its investigation. Shares of Facebook’s stock slightly increased in after-hours trading to $205 per share; the company’s stock had increased 1.8% during normal trading hours on Friday.

After the Cambridge Analytica data leak highlighted a turbulent 2018 for Facebook, the company has been unable to completely shake its privacy woes in 2019. In March, the company said hundreds of millions of user passwords had been stored in plain text — leaving them exposed to thousands of Facebook employees. Facebook VP Pedro Canahuati later said the company found “no evidence” the passwords were inappropriately accessed by company employees. And just last week, Business Insider reported Facebook harvested the email contacts of 1.5 million users without consent.

In March, CEO Mark Zuckerberg outlined a company-altering plan to “build a simpler platform that’s based on privacy first.” In a lengthy blog post, Zuckerberg said that the strategic shift will include end-to-end encrypted messaging across all of Facebook’s platforms, barring Facebook and law enforcement from being able to read private conversations. Facebook-owned WhatsApp already has encrypted messaging, and it’s available as an opt-in feature on Messenger.

Facebook was already operating under a 2011 agreement with the FTC to not share its users’ data with third-parties without “express consent.”

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