Facebook hit with $5B fine, probe
WASHINGTON — Federal regulators fined Facebook $5 billion for privacy violations and are instituting new oversight and restrictions on its business. But they are only holding CEO Mark Zuckerberg personally responsible in a limited fashion.
And just hours after the Federal Trade Commission announced the fine, Facebook also said it is under an antitrust investigation by the agency.
The fine is the largest the FTC has levied on a tech company, though it won’t make much of a dent for a company that had nearly $56 billion in revenue last year. Two of the five commissioners opposed the settlement and said they would have preferred litigation to seek tougher penalties. Privacy advocates worry the settlement will do little to force Facebook to rein in its datacollection practices.
As part of the agency’s settlement with Facebook, Zuckerberg will have to personally certify his company’s compliance with its privacy programs. The FTC said that false certifications could expose him to civil or criminal penalties. Zuckerberg
Some experts had thought the FTC might fine Zuckerberg directly or seriously limit his authority over the company.
Facebook isn’t admitting any wrongdoing. The company’s top lawyer, Colin Stretch, said the company’s FTC settlement will lead to more rigorous management of user privacy — including more technical controls to better automate privacy safeguards.
FTC Chairman Joe Simons said the settlement is “unprecedented in the history of the FTC” and is designed “to change Facebook’s entire privacy culture to decrease the likelihood of continued violations.”
The FTC opened an investigation into Facebook last year after revelations that data mining firm Cambridge Analytica had gathered details on as many as 87 million Facebook users without their permission. The agency said Wednesday that Facebook “repeatedly used deceptive disclosures and settings to undermine users’ privacy preferences.”
Facebook will pay a separate $100 million fine to the Securities and Exchange Commission to settle charges it made misleading disclosures about the risk of misuse of Facebook user data. The SEC said Facebook presented misuse of data as a hypothetical for two years even though it knew since 2015 that the third-party developer had actually misused user data.
Three Republican commissioners voted for the settlement while two Democrats opposed it, a clear sign that the restrictions on Facebook don’t go as far as critics and privacy advocates had hoped. That wish list included specific punishment for Zuckerberg, strict limits on what data Facebook can collect and possibly even breaking off subsidiaries such as Whatsapp and Instagram.
“The proposed settlement does little to change the business model or practices that led to the recidivism,” Commissioner Rohit Chopra wrote in his dissenting statement. He noted that the settlement lacks “any restrictions on the company’s mass surveillance or advertising tactics.”
Ashkan Soltani, a former FTC chief technologist, said the settlement “amounts to essentially a get-out-of-jail free card for Facebook,” by indemnifying the company from government prosecution for all claims prior to June 12.
Simons, the FTC’S chairman, said in a news conference Wednesday that the agency has limited legal powers to enforce privacy rules. For stiffer penalties, he said, the agency would have faced long odds in drawn-out litigation.
Despite the record fine, and all the public flogging triggered by the Cambridge Analytica scandal, Facebook’s stock rose $2.30, or 1.14%, to $204.66 Wednesday.