Facebook Set to be Fined $5-billion (AU $7.1-billion) for Privacy Violations

Reports from the Wall Street Journal and the Washington Post have cited a number of sources familiar with the settlement, reporting that the settlement between the federal trade commission (FTC) and Facebook was approved in a vote 3-2.

The Washington Post’s Tony Romm writes that “the FTC’s punishment sets a new record as the largest penalty ever assessed against a tech company that broke a past promise to the government to improve its privacy practices- more than 200 times greater than the previous largest fine.”

Their report cited David Vladeck, former director of the FTC’s Bureau of Consumer Protection, who is now a law professor working at Georgetown University, outlining that “it’s quite a substantial amount of money, and it sets a baseline [for] the Googles, Microsofts, Apples and Twitters of the world.”

The FTC’s investigation into Facebook’s mishandling of user information was launched in March 2018, after the Observer first broke the news of Facebook’s enabling of political-consultancy group, Cambridge Analytica accessing the private information of more than 50-million Facebook users, however later estimates have put the figure north of 80-million.

The U.S. Justice Department will now make its final approval of the settlement, according to reports.

According to The Guardian, “Facebook had agreed under a 2012 consent decree stemming from a previous FTC investigation into privacy concerns to better protect user privacy. The investigation centered on whether this decree had been violated.” Specific clauses in the agreement stipulated that Facebook must gain a user’s “expressed consent” to harvest and use the data.

While the reported fine may seem large, as David Cicilline, Democratic congressman pointed out, “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 misconduct is getting a slap on the wrist.”

The stock market agreed with this sentiment, with Facebook’s share price actually jumping 1.8% at the close of last week’s trading. In April this year, Facebook said it expected a fine as high as $5 billion when the FTC handed down its decision, setting aside a large portion of its $15-billion quarterly profits in anticipation of the settlement.

Spokespeople from both Facebook and the FTC have declined to make public comments, however the settlement could be finalised as soon as this week; we’ll follow up on comments made by the FTC and Facebook.

Senator Rob Wyden said the fine makes a clear example of how difficult it is to how tech companies of Facebook’s size accountable. “This reported fine is a mosquito bite to a corporation the size of Facebook,” he wrote. “I fear it will let Facebook off the hook for more recent abuses fo American’s 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.” Wyden’s bill is similar to the recent push from Senators Mark Warner and Josh Hawley that we covered a few weeks ago, calling for more transparency from tech giants like Facebook.

One of the aforementioned senators, Mark Warner said that “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 safeguards to ensure that user privacy and data are protected, it’s time for congress to act,” he said.

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