FTC approves $5B Facebook fine
Settlement would end government’s probe into company’s privacy practices, pending approval from U.S. Department of Justice
WASHINGTON — The Federal Trade Commission voted this week to approve a roughly $5 billion settlement with Facebook that could end an investigation into its privacy practices, said a person familiar with the matter but not authorized to speak on the record.
The deal could result in unprecedented government oversight of the company.
The settlement — adopted with the FTC’s three Republicans supporting it and two Democrats against it — could end a wide-ranging probe into Facebook’s mishandling of users’ personal information that began more than a year ago.
The FTC’s $5 billion punishment against Facebook sets a record as the largest penalty ever assessed against a tech company that broke a past promise to the government to improve its privacy practices.
The matter from here rests in the hands of the Justice Department, which typically must finalize FTC settlements, though the department rarely has upended them.
Facebook warned investors earlier this year it could face an FTC fine as high as $5 billion. Wall Street appeared to reward the company for setting aside a large portion of that penalty earlier this year, as the company’s stock rose almost 2 points following news of the settlement Friday.
The FTC declined to comment on the matter. Facebook also declined to comment.
The FTC opened its investigation into Facebook in March 2018, responding to reports that the political consultancy Cambridge Analytica improperly accessed personal data of 87 million Facebook users, which critics charged had violated an agreement Facebook brokered with the FTC in 2011 to protect users’ privacy.
Cambridge Analytica developed a quiz app that harnessed information on those who installed it as well as their friends, a form of data collection that Facebook had allowed under an earlier version of its privacy policy.
Such information might have helped Cambridge Analytica create profiles of users so clients could better target people with political messages.
But the FTC’s probe quickly expanded beyond the Cambridge Analytica incident to cover a torrent of other privacy and security abuses at Facebook, including the revelation it had provided popular websites and the makers of some smartphones and other devices with access to users’ social data without adequately notifying them.
Under the FTC’s new settlement, the consequences for Facebook could be vast: The tech giant might have to document every decision it makes about data before offering new products, keep closer watch over third-party apps that tap users’ information and require its top executives — including Facebook CEO Mark Zuckerberg — to attest that the company adequately has protected privacy.
Facebook had agreed to broad contours of those terms as part of confidential settlement talks with the FTC, the Post reported earlier this year.
The new settlement would go far beyond the 2011 agreement Facebook brokered with the FTC.
That accord required Facebook to give users greater choice about what happens to their data and inform them more clearly about how their personal information is used. The agreement also required Facebook to submit to 20 years of regular privacy checkups from outside watchdogs, though those reviewers never once flagged a major mishap at the company for the FTC to review.
The Wall Street Journal first reported details of the FTC’s vote.
The decision by the commission’s two Democrats to vote against the settlement could suggest simmering frustrations that the FTC didn’t go far enough in the fine and other punishments it levied against Facebook to end the probe.
But the alternative — if Facebook resisted brokering such a deal — could have forced the two sides to go to court.