Facebook, which has faced intensifying government scrutiny after revelations of its misappropriation of user data, has agreed to a record $5 billion fine and new restrictions.
In a settlement with the Federal Trade Commission made public on Wednesday (hours before the company was slated to report its quarterly earnings), the company agreed that CEO Mark Zuckerberg will personally have to sign off on compliance. Failure to meet the new requirements could bring civil and criminal penalties.
Critics of the deal, including the two Democratic minority FTC commissioners, blasted it as inadequate.
“It doesn’t fix the incentives causing these repeat privacy abuses,” Commissioner Rohit Chopra said in one of a series of tweets explaining his vote against the settlement. “It doesn’t stop Facebook from engaging in surveillance or integrating platforms. There are no restrictions on data harvesting tactics — just paperwork. Facebook gets to sign off on what’s acceptable.”
The social media giant and its Big Tech peers are not out of the woods by any stretch in terms of regulation. The antitrust division of the Department of Justice on Tuesday announced an investigation of tech companies. That move is in keeping with the sentiments of President Donald Trump, who has raised concerns about monopoly power but also what he calls “bias” in areas like search results on Google or the way Twitter and Facebook filter posts.
In a news release, the FTC emphasized that the fine is “the largest ever imposed on any company for violating consumers’ privacy and almost 20 times greater than the largest privacy or data security penalty ever imposed worldwide.” It is also “one of the largest” ever imposed on any U.S. company for any violation, the commission added.
Colin Stretch, general counsel for Facebook, wrote in a blog post that the agreement “will require a fundamental shift in the way we approach our work and it will place additional responsibility on people building our products at every level of the company. It will mark a sharper turn toward privacy, on a different scale than anything we’ve done in the past.”
Investors have thus far not registered any particular alarm about the consequences for Facebook. Its shares were trading at around $201 as of mid-day Wednesday.
A cascading series of events through 2017 and 2018 has led to calls for Facebook to be broken up. Several leading Democratic presidential candidates, among them Elizabeth Warren and Bernie Sanders, have made such a breakup a cornerstone issue in their campaigns.
Digital competitors say it and Google unfairly control the majority of digital advertising. In the name of user engagement and growth, the company also made ill-advised partnerships with firms like the now-defunct Cambridge Analytica, which improperly accessed users’ information. Zuckerberg has testified in Congress about the breaches and has taken steps to implement more oversight, not only on the data front but in terms of the kind of content appearing on the platform.
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