FTC Reportedly Approves $5 Billion Settlement With Facebook
Above Photo: Mobileapp Daily/Flickr
SAN FRANCISCO—The FTC has voted to approve a fine of about $5 billion for Facebook over privacy violations, the Wall Street Journal reported Friday. The report cited an unnamed person familiar with the matter.
Facebook and the FTC declined to comment. The Journal said the 3-2 vote broke along party lines, with Republicans in support and Democrats in opposition to the settlement.
The FTC report has been moved to the Justice Department for review, per the report. It is not clear how long it will take to finalize.
The fine would be the largest the FTC has levied on a tech company. But it won’t make much of a dent for Facebook, which had nearly $56 billion in revenue last year. Facebook has earmarked $3 billion for a potential fine and said in April it was anticipating having to pay up to $5 billion.
The report did not say what else the settlement includes beyond the fine, though it is expected to include limits on how Facebook treats user privacy. There have also been calls to the FTC to hold Facebook CEO Mark Zuckerberg personally liable for the privacy violations in some way, but based on the party line vote breakdown experts said this is not likely.
Marc Rotenberg, president of the nonprofit online privacy advocacy group Electronic Privacy Information Center, said he was “confused” as to why the Democrat commissioners didn’t support the settlement and said he suspects, without having seen the actual settlement, that this was due to the Zuckerberg liability question.
“But I thought that was misguided,” he said, adding that EPIC instead supports more wholesale limits on how Facebook handles user privacy.
Since the Cambridge Analytica debacle erupted more than a year ago and prompted the FTC investigation, Facebook has vowed to do a better job corralling its users’ data. Nevertheless, its controls have remained leaky. For example, It also acknowledged giving big tech companies like Amazon and Yahoo extensive access to users’ personal data, in effect exempting them from its usual privacy rules. And it collected call and text logs from phones running Google’s Android system in 2015.
Still, Wall Street has appeared unfazed at the prospect of the fine. Facebook’s shares closed at $204.87 on Friday and added 24 cents after hours. The stock is up more than 50 percent since the beginning of the year.
“This closes a dark chapter and puts it in the rearview mirror with Cambridge Analytica,” said Wedbush analyst Daniel Ives. “Investors still had lingering worries that the fine might not be approved. Now, the Street can breathe a little easier.”