Social media giant Facebook will have to pay a record-breaking $5 billion (€4,486 billion) fine, accept news restrictions and a modified corporate structure that will hold the company accountable for decisions it makes about users’ privacy to settle a government probe into its privacy practices, said the US Federal Trade Commission on Wednesday.
The $5 billion penalty against the tech giant is the largest ever imposed on any company for violating users’ privacy and almost 20 times greater than the largest privacy or data security penalty ever imposed worldwide. It is also one of the largest penalties ever imposed by the US government for any violation.
Will this be enough to deter Facebook from sharing user data?
The FTC said that Facebook’s data policy was deceptive to “tens of millions” of people who used Facebook’s facial recognition tool. It also violated its rules about deceptive practices when it used phone numbers it obtained to enable security features for advertising.
“Despite repeated promises to its billions of users worldwide that they could control how personal information is shared Facebook undermined consumers’ choices,” said FTC Chairman Joe Simons, a Republican, in a statement.
But for some, the penalty went too soft on Facebook executives.
Democratic FTC Commissioner Rohit Chopra said the penalty provided “blanket immunity” for Facebook executives “and no real restraints on Facebook’s business model” and does “not fix the core problems that led to these violations.”
Chopra and Democratic FTC Commissioner Rebecca Slaughter said the company’s culture would not change until “Facebook’s core financial incentives for risking personal privacy and national security” were addressed.
But the FTC Republican majority argued the settlement “significantly diminishes Mr. Zuckerberg’s power — something no government agency, anywhere in the world, has thus far accomplished.”
“Today Facebook reached an agreement with the Federal Trade Commission and the Department of Justice over allegations that it broke a previous agreement over privacy. In reaching the settlement, Facebook has agreed to pay a $5 billion penalty, which is one of the largest in history. But even more important, Facebook will make some major changes to how it builds products and operates as a company,” said the company in a statement.
What else will Facebook have to do?
Under the settlement, Facebook will have to create an independent privacy committee that gets rid of “unfettered control by Facebook CEO Mark Zuckerberg over decisions affecting user privacy,” said the FTC.
The company’s CEO Mark Zuckerberg and other compliance officers will have to submit quarterly reports to the FTC that Facebook is complying with the privacy programme mandated by the order.
Facebook will also have to exercise greater oversight over third-party apps.
The tech giant will not be able to ask for email passwords to other services when consumers sign up and use telephone numbers for advertising.
The FTC also announced that Cambridge’s former CEO Alexander Nix and former app developer Aleksandr Kogan, who worked with the company, had agreed to a settlement with the FTC that would restrict how they do business in the future.