Facebook will pay $5bn fine over privacy violations

The US Federal Trade Commission (FTC) has reached a $5bn settlement with Facebook Inc over its year-long investigation into allegations of widespread mistreatment of consumer data.

The settlement, announced on Wednesday, commits the social media behemoth to restructuring its approach to users’ privacy, and setting up tools to allow the FTC to monitor its practices. The penalty is the largest privacy fine in history, but is also equivalent to around the amount Facebook makes in a month.

“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices,” said FTC chairman Joe Simons.

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The news comes against a backdrop of increased concerns in Washington, and with governments internationally, around the vast power accumulated by powerful tech companies. Facebook’s share price dropped roughly 1% early on Wednesday.

As The Daily Telegraph reports, “The fine against Facebook comes one day after the US Department of Justice opened an investigation into whether companies such as Facebook, Amazon and Google 'stifled innovation' by thwarting competition unlawfully.”

Facebook doesn’t admit any wrongdoing, but has said it will pay the fine.

The settlement divided the FTC, which is comprised of five members - two Democrats and three Republicans - along party lines. Republicans championed the agreement, while Democrats deemed it insufficiently punitive.

The Washington Post reports that the FTC was split over issues such as the culpability of Facebook CEO Mark Zuckerberg. Despite the Democratic members’ belief “that corporate leaders should be held personally accountable for their companies’ repeated privacy mishaps”, Facebook “steadfastly opposed placing Zuckerberg under order”, says the newspaper.

The settlement was reached on the proviso that Zuckerberg would avoid direct liability.

Nevertheless, according to Reuters, “under the… settlement, Facebook’s board will create an independent privacy committee that removes ‘unfettered control by Facebook CEO Mark Zuckerberg over decisions affecting user privacy.’”

“Mark Zuckerberg, chief executive, and the privacy officers will be required to certify that the company is in compliance with Facebook’s privacy programme on a quarterly basis,” the Financial Times reports.

The FTC said: “Any false certification will subject them to individual civil and criminal penalties.”

Democrat commissioners also believed the fine should have been higher.

The agency probe focused specifically on whether Facebook violated a previous 2011 privacy settlement. According to the Associated Press, the investigation was opened “last year after revelations that data mining firm Cambridge Analytica had gathered details on as many as 87 million Facebook users without their permission”.

FTC chairman Simons said in a statement that the measures “will provide significant deterrence not just to Facebook, but to every other company that collects or uses consumer data”.

The New York Times suggests that Democrat commissioner Rohit Chopra dissagreed, quoting him as saying: “When companies can violate the law, pay big penalties and still turn a profit while keeping their business model intact, enforcement agencies cannot claim victory.”

Zuckerberg posted on his Facebook page: “We have a responsibility to protect people’s privacy. We already work hard to live up to this responsibility, but now we’re going to set a completely new standard for our industry.”