FTC Facebook settlement: $5 billion fine reported for user privacy violations

Daniel Fowler
July 13, 2019

The Journal's report said that the FTC settlement will include "government restrictions on how Facebook treats user privacy", however, it remains unclear what those restrictions entail.

According to The WSJ, the vote to settle with Facebook was predictable: the three Republicans on the FTC voted in favor of the settlement, whereas the two Democratic Commissioners took the opposite stance; seemingly feeling that the settlement didn't have enough impact.

The FTC launched the investigation in March 2018 after reports emerged that tens of millions of Facebook users lost their private data with data analytics firm Cambridge Analytics.

The settlement is the largest privacy fine in the FTC's history and also marks the most significant action yet against Facebook over a series of mishaps that have compromised users' data and sent the company reeling from one crisis to another. Since then, Facebook has also come under public scrutiny for offering more of its users' data to companies than it had previously admitted.

Even a fine in the billions is simply a write-down for the company, and large penalties have done little to deter large tech firms.

The $5 billion fine still needs to be OK'd by the Department of Justice, but DOJ "rarely" rejects FTC settlements, the New York Times reported.

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The multi-billion-dollar settlement draft, details of which appeared in the United States mainstream media this afternoon ahead of any official word from the FTC or Facebook, will be the watchdog's largest in its history.

The long-expected punishment, which Facebook is well prepared for, is unlikely to make a dent in the social media giant's deep pockets. At issue was whether Facebook violated a 2011 settlement with the FTC over user privacy.

In response, Facebook has since repeatedly vowed to do a better job corralling its users' data, but fell short of FTC expectations.

Facebook earlier this year said it had set aside $3 billion to pay for what it said it expected to be a $3 billion to $5 billion penalty.

If the reports of the deal are true, and if the settlement is accepted by both sides and approved, Facebook will have to cough up $5bn, which is at the upper end of what the Silicon Valley web giant was expecting. Democrats on the commission were "pushing for tougher oversight", the Journal wrote.

Facebook's revenue for the first quarter of this year was $15.1 billion (roughly Rs. 1,02,840 crores) while its net income was $2.43 billion (roughly Rs. 16,660 crores).

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