Abu Dhabi, UAESunday 9 August 2020

Facebook's record $5bn privacy settlement a 'tap' on the wrist as politicians cry foul

Cambridge Analytica settlement marks the most significant action yet against Facebook over a series of mishaps that have compromised users’ data

Facebook CEO Mark Zuckerberg makes the keynote speech at F8, Facebook's developer conference in San Jose, California earlier this year. The $5bn fine approved by the US FTC is steep but far from devastating for the social media giant. AP
Facebook CEO Mark Zuckerberg makes the keynote speech at F8, Facebook's developer conference in San Jose, California earlier this year. The $5bn fine approved by the US FTC is steep but far from devastating for the social media giant. AP

US regulators have endorsed an approximate $5 billion (Dh18.3bn) privacy settlement with Facebook to resolve the Cambridge Analytica data scandal, following a long-running probe into the tech giant's handling of user data, the Wall Street Journal reported.

The US Federal Trade Commission (FTC) settlement was voted on 3-2 in favour of the agreement, with the republican majority backing the pact while democratic commissioners objected, the newspaper reported on Friday, citing people familiar with the matter. The Justice Department’s civil division still needs to approve it and it is unclear how long it will take to finalise.

The FTC and Facebook declined to comment.

The FTC is expected to include in the settlement other restrictions on how Facebook treats user privacy, according to the WSJ.

The resolution was slowed down by the party-line split on the FTC, with democrats pushing for tougher oversight of the social media giant, the paper said.

One point of disagreement was the extent to which Mark Zuckerberg, Facebook's chief executive, should be held responsible or be made accountable for future missteps.

Several powerful democratic lawmakers in Washington condemned the proposed penalty, the highest civil penalty ever paid to the agency, as inadequate.

“This reported $5bn penalty is barely a tap on the wrist, not even a slap,” said senator Richard Blumenthal, a Connecticut democrat, who called for a hearing on the agreement. “Such a financial punishment for purposeful, blatant illegality is chump change for a company that makes tens of billions of dollars every year,” Mr Blumenthal said, according to Bloomberg.

The resolution caps a probe that opened in March 2018 after news that Cambridge Analytica, a consulting firm hired by President Donald Trump’s campaign, obtained user data from a researcher who created a personality quiz app on the social network.

The FTC investigation began more than a year ago after reports that personal data of tens of millions of Facebook users improperly wound up in the hands of Cambridge Analytica, a data firm that worked on President Trump’s 2016 campaign. The FTC investigation centred on whether that lapse violated a 2012 consent decree with the agency under which Facebook agreed to better protect user privacy.

Representative David Cicilline, a democrat and chair of a congressional antitrust panel, called the $5bn penalty 'a Christmas present five months early' for Facebook.

Cambridge Analytica shut down in 2018 amid the allegations surrounding Facebook data and other questions about its political tactics. The company had won political consulting work in the US by promising to use data to profile and influence voters with political messages. It contracted for several republican presidential candidates ahead of the 2016 election, including Mr Trump’s campaign.

The user data issue in the Facebook case reached beyond those who downloaded the app to include about 30 different data points about those users' Facebook friends.

The settlement would easily exceed the previous record penalty for violating an FTC order, a $22.5m fine levied against Google in 2012. The commission has limited powers to impose fines for first-time privacy violations but has broad latitude to sanction repeat offenders.

Facebook said in April that to settle the probe it was expecting to pay up to $5bn. The reported settlement amount was $2bn more than the company has reserved for the settlement. Facebook’s profit for the first quarter before accounting for the penalty was slightly more than $5bn.

Representative David Cicilline, a democrat and chair of a congressional antitrust panel, called the $5bn penalty “a Christmas present five months early", according to Reuters.

“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.

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, Reuters reported.

Public interest groups including Public Knowledge, Public Citizen and the Open Markets Institute said any deal with the FTC should impose remedies that would rein in Facebook’s data collection practices in addition to a fine.

“Something clearly has to be done to strengthen the data protection practices of that company,” said Marc Rotenberg, president of the Electronic Privacy Information Center, which filed a complaint against Facebook that led to the FTC’s 2011 consent decree with the social-media company that addressed a litany of deceptive practices.

Updated: July 13, 2019 02:52 PM

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