FB to pay $5bn fine over privacy violations

Daniel Fowler
July 16, 2019

Facebook is reportedly set to be handed a record $5bn fine by a U.S. regulator over privacy violations leading to the Cambridge Analytica scandal.

Part of the settlement, which still needs approval by the Justice Department, is expected to curtail Facebook's data policies, though the specific details are not now known.

The consumer protection agency the FTC began investigating Facebook in March 2018 following reports that Cambridge Analytica had accessed the data of tens of millions of its users.

Today, Reuters studies that the FTC has indeed permitted a $5 billion settlement with Facebook for violating a consent decree it signed with the regulatory company back in 2011.

Moreover, with first quarter revenues of $15 billion and a balance sheet that boasts $45 billion dollars in cash and cash equivalents - the fine, though large, is unlikely to prove very damaging to Facebook's long-term prospects.

It comes after an FTC investigation into allegations that the social media platform inappropriately shared the information of 87 million users with Cambridge Analytica. He said that the FTC action, together with recent European fines on British Airways and Marriott, shows that regulators around the world are getting bolder in cracking down on data privacy violations. The largest fine ever imposed before this in the USA was the $22.5 million penalty levied on Google in 2012. Facebook had $15 billion in revenue last quarter and made $22 billion in profit past year alone, according to The Verge. Facebook's shares closed at $204.87 on Friday and added 24 cents after hours.

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"The reported $5 billion penalty is barely a tap on the wrist, not even a slap", said Senator Richard Blumenthal, a Democrat from CT.

This has angered opponents who believe the sanctions do not go far enough in financial terms, nor do they mandate any meaningful change in the manner in which Facebook conducts itself. The FTC should break Facebook up, plain and simple.

There has also been a division in the house which has lingered the Facebook FTC settlement. "It is clear that Facebook has too much power and is too big to manage". The stock is up more than 50% since the beginning of the year.

Some have called on the FTC to hold Facebook CEO Mark Zuckerberg personally liable for the privacy violations in some way, but based on the party line vote breakdown, experts said this is not likely. Democrats were opposed to the fine and Republicans in favour of it. The Washington Post covered other elements of the settlement, including a ruling that states Facebook will need to disclose how it'll use data before new products are released.

Recently, U.S. President Donald Trump bashed Facebook and other companies for being anti-conservative and also criticized the social media giant's upcoming Libra cryptocurrency. Similarly, European officials have been calling for regulation of Facebook.

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