FTC settles with Facebook with $5 billion fine


The Federal Trade Commission (FTC) has reportedly approved a roughly $5 billion settlement with Facebook following its investigation into the company's handling of the Cambridge Analytica scandal, the largest the FTC has ever imposed for privacy violations.

The Wall Street Journal, citing a person familiar with the matter, reported Friday that the FTC voted along party lines this week to approve the settlement, closing the investigation into the Cambridge Analytica incident.

The vote was 3-2, with Republicans in the majority approving the deal, according to the Journal.

The investigation was launched in March 2018 after reports that data from tens of millions of Facebook users was shared with the outside firm Cambridge Analytica. The agency had focused on whether Facebook violated a 2011 consent agreement with the FTC requiring greater privacy protections and transparency for users.

The FTC and Facebook both declined to comment. According to the Journal, the settlement now heads to the Department of Justice for review.

Facebook told investors earlier this year that it expected to pay between $3 billion and $5 billion to settle the investigation.

That admission worried the company's biggest critics, including members of Congress, who argued that any sum in that range would hardly make a dent in Facebook's bottom line and that the agency needed to impose severe penalties in order to change its behavior.

After the Journal published its story, Rep. David Cicilline (D-R.I.), who's leading an antitrust investigation into Facebook and other Silicon Valley giants, blasted the reported settlement.

"The FTC just gave Facebook a Christmas present five months early," Cicilline said in a statement. "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," he added.

Though the fine represents the largest handed down by the FTC for privacy violations, it amounts to a fraction of the $55 billion in revenue Facebook generated last year.

In May, Sens. Richard Blumenthal (D-Conn.) and Josh Hawley (R-Mo.) wrote to the FTC saying that the sum Facebook expected to pay would be a "bargain" for the nearly $600 billion company and that the agency should consider holding individual executives responsible.

"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 bipartisan duo wrote. "If the FTC is seen as traffic police handing out speeding tickets companies profiting off breaking the law, then Facebook and other will continue to push the boundaries."

The Journal reported that the settlement will include "government restrictions on how Facebook treats user privacy" but it's unclear what that would entail.

Facebook was also fined £500,000 last year by the U.K. Information Commissioner's Office over the scandal, the largest penalty the office was authorized to levy.

And the company is facing a lawsuit from the D.C. attorney general and those from other states over the privacy debacle.

The partisan divide within the FTC will likely raise concerns among Facebook's critics on Capitol Hill. The group Freedom From Facebook, a coalition of public interest groups, called the fine a slap on the wrist.

“The FTC continues to lay bare their inability to protect American consumers and markets and Congress needs to investigate the FTC’s wanton disregard of their duties," Sarah Miller, the group's co-chair, said in a statement.

"It’s also clear that we’re going to need Congress and the state attorneys general to take the mantle of any future antitrust investigation of Facebook because Trump’s FTC appointees are not up to the task.”

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