Antitrust Law Daily $5 billion FTC settlement with Facebook reported
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Monday, July 15, 2019

$5 billion FTC settlement with Facebook reported

By Paul Kirby, TR Daily

FTC approves $5 billion settlement of its probe into the social media giant’s privacy practices.

The Federal Trade Commission has approved on a 3-2 party line vote a $5 billion settlement of its investigation into Facebook, Inc.’s privacy practices, news reports said. The probe was launched in the wake of the Cambridge Analytica controversy.

In the wake of Facebook’s acknowledgment last spring that Cambridge Analytica collected the personal information of 50 million Facebook users without their consent as part of a political influence campaign, the FTC announced that it was investigating Facebook’s privacy practices.

Facebook said in April that it estimated that the FTC’s investigation into its handling of users’ data would cost it $3 billion to $5 billion.

Facebook and the FTC reached an agreement to settle the FTC’s investigation into alleged privacy violations by the company in 2011, and the agreement was finalized in 2012. The settlement agreement required Facebook to strengthen its privacy policies.

Reports of the apparent settlement drew criticism from Democrats in Congress and some others.

House antitrust subcommittee Chairman David N. Cicilline (D., R.I.) said, "The FTC just gave Facebook a Christmas present five months early. It’s very disappointing that such an enormously powerful company that engaged in such serious misconduct is getting a slap on the wrist. This fine is a fraction of Facebook’s annual revenue. It won’t make them think twice about their responsibility to protect user data. ... If the FTC won’t protect consumers, Congress surely must."

"Despite Republicans’ promises to hold big tech accountable, the FTC appears to have failed miserably at its best opportunity to do so," said Sen. Ron Wyden (D., Ore.). "No level of corporate fine can replace the necessity to hold Mark Zuckerberg personally responsible for the flagrant, repeated violations of Americans' privacy. That said, this reported fine is a mosquito bite to a corporation the size of Facebook. And I fear it will let Facebook off the hook for more recent abuses of Americans' data that may not have been factored in to this inadequate settlement. The only way to assure Americans that our private data will be protected is to pass a strong privacy bill, like the one I plan to introduce in the coming weeks."

"The FTC is foolish and fool-hearty to rely on money alone to punish decades of past privacy violations and ongoing profiteering," said Sen. Richard Blumenthal (D., Conn.). "Facebook’s business model is to monetize personal, confidential consumer information. It is relentlessly and tirelessly expanding its business model to invade our private lives. Only structural, behavioral, and leadership reforms can restrain and hold Facebook accountable.

"This reported $5 billion penalty is barely a tap on the wrist, not even a slap," Sen. Blumenthal added. "Such a financial punishment for purposeful, blatant illegality is chump change for a company that makes tens of billions of dollars every year. Will Facebook be compelled to alter its present, systematic abuse of privacy? Based on the reported settlement, the answer is sadly, no. The FTC must be held accountable for this seemingly inadequate, unconscionably delayed, and historically hollow result. There must be Congressional hearings."

"Given Facebook’s repeated privacy violations, it is clear that fundamental structural reforms are required. With the FTC either unable or unwilling to put in place reasonable guardrails to ensure that user privacy and data are protected, it’s time for Congress to act," said Sen. Mark R. Warner (D., Va.).

Charlotte Slaiman, Competition Policy Counsel at Public Knowledge, said the financial settlement would not by itself "be sufficient to change Facebook’s behavior." She added that the reported dissent of the two Democratic FTC commissioners raises "a question of what other important issues possibly should have been addressed in the reported settlement. I’m hopeful that additional conditions placed on Facebook’s business practices will be forthcoming. Those conditions should protect not just user privacy, but also the users’ opportunity to easily leave Facebook for a competitor if they choose."

But Nuala O’Connor, president and chief executive officer of the Center for Democracy & Technology, said, "This record-breaking fine highlights the importance of data stewardship in the digital age. The FTC has put all companies on notice that they must safeguard personal information. Privacy regulation in the U.S. is broken. While large after-the-fact fines matter, what is much more important is strong, clear rules to protect consumers. Congress must pass a comprehensive federal privacy law this year.

Companies: Facebook, Inc.

MainStory: TopStory Privacy FederalTradeCommissionNews

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