Date
17 August 2019
The settlement would be the largest civil penalty ever paid to the US Federal Trade Commission. Photo: Bloomberg
The settlement would be the largest civil penalty ever paid to the US Federal Trade Commission. Photo: Bloomberg

US regulators approve US$5 bln Facebook settlement: report

The US Federal Trade Commission has approved a roughly US$5 billion settlement with Facebook Inc. over its investigation into the social media company’s handling of user data, Reuters reports, citing a source familiar with the situation.

The FTC has been investigating allegations Facebook inappropriately shared information belonging to 87 million users with the now-defunct British political consulting firm Cambridge Analytica. The probe has focused on whether the data sharing violated a 2011 consent agreement between Facebook and the regulator.

The FTC is expected to include in the settlement other restrictions on how Facebook treats user privacy, according to the Wall Street Journal, which also said that the agency vote was along party lines, with three Republicans voting to approve it and two Democrats opposed.

The settlement would be the largest civil penalty ever paid to the agency.

Representative David Cicilline, a Democrat and chair of a congressional antitrust panel, called the US$5 billion penalty “a Christmas present five months early”.

“This fine is a fraction of Facebook’s annual revenue. It won’t make them think twice about their responsibility to protect user data,” he said.

Facebook’s revenue for the first quarter of this year was US$15.1 billion while its net income was US$2.43 billion. It would have been higher, but Facebook set aside US$3 billion for the FTC penalty.

While the deal resolves a major regulatory headache for Facebook, the Silicon Valley firm still faces further potential antitrust probes as the FTC and Justice Department undertake a wide-ranging review of competition among the biggest US tech companies.

It is also facing public criticism from US President Donald Trump and others about its planned cryptocurrency Libra over concerns about privacy and money laundering.

While details of the agreement are unknown, in a letter to the FTC earlier this year, Senators Richard Blumenthal, a Democrat, and Josh Hawley, a Republican, told the agency that even a US$5 billion civil penalty was too little and that top officials, potentially including founder Mark Zuckerberg, should be held personally responsible.

FTC Commissioner Rohit Chopra, a Democrat, has said the agency should hold executives responsible for violations of consent decrees if they participated in the violations. Chopra did not respond to requests for comment on Friday.

The settlement still needs to be finalized by the Justice Department’s Civil Division and a final announcement could come as early as this week, the source said.

A source knowledgeable about the settlement negotiations had told Reuters in May any agreement would put Facebook under 20 years of oversight.

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RC/CG

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