Facebook to Pay $5 Billion Penalty for Privacy Violations

Facebook CEO Mark Zuckerberg makes the keynote speech at a developer conference, in San Jose, Calif., on April 30, 2019. (AP Photo/Tony Avelar)

WASHINGTON (CN) – Social media giant Facebook will pay $5 billion and adhere to new privacy guidelines following a sweeping Federal Trade Commission investigation into the mishandling of personal user data.

The fine is the largest in FTC history but is just a fraction of the company’s annual revenues. It pulled in nearly $56 billion last year alone.

As part of the massive settlement, Facebook CEO Mark Zuckerberg will have to certify compliance with new privacy programs. The company did not admit to any wrongdoing under the deal.

The extent of the company’s alleged misdeeds was broken down in a civil lawsuit filed by the federal government Wednesday morning, which was settled by the FTC deal.

“To encourage users to share information, Facebook promises users that they can control the privacy of their information through Facebook’s privacy settings,” the complaint states. “However, through at least June 2018, Facebook subverted users’ privacy choices to serve its own business interests.”

The FTC specifically alleges that privacy violations occurred through the use of apps that can be installed by users.

“Facebook’s default settings were set so that Facebook would share with the third-party developer of an App User’s app not only the App User’s data, but also data of the App User’s Facebook Friends, even if those Affected Friends had not themselves installed the app,” the lawsuit states. “In the wrong hands, user and Affected Friend data could be used for identity theft, phishing, fraud, and other harmful purposes.”

The $5 billion fine stems from an investigation into whether Facebook violated a 2012 agreement with government regulators that required the social media giant to get users’ consent to share personal information in ways that go beyond their privacy settings.

“At least tens of millions of American users relied on Facebook’s deceptive privacy settings and statements to restrict the sharing of their information to their Facebook Friends, when, in fact, third-party developers could access and collect their data through their Friends’ use of third-party developers’ apps,” the complaint states. “Facebook knew or should have known that its conduct violated the 2012 Order because it was engaging in the very same conduct that the Commission alleged was deceptive in Count One of the original Complaint that led to the 2012 Order.”

In a statement about the FTC fine, Facebook general counsel Colin Stretch said just this month the company “discovered that shortcomings in our systems allowed some partners to continue accessing data to provide Facebook features on their products.”

“While we found no abuse, the new agreement will help ensure against such risks going forward,” Stretch said. “We will also be more diligent in how we monitor for abuse, and we’ll require developers to be accountable for the ways they use data and comply with our policies.”

Meanwhile, FTC Chairman Joe Simons said in a statement that the $5 billion fine and other relief in the settlement are “are unprecedented in the history of the FTC.”

“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices,” Simons said. “The relief is designed not only to punish future violations but, more importantly, to change Facebook’s entire privacy culture to decrease the likelihood of continued violations. The Commission takes consumer privacy seriously, and will enforce FTC orders to the fullest extent of the law.”

Three Republican commissioners voted to approve the settlement, but two Democrats opposed it and said it did not go far enough.

Commissioner Rohit Chopra, a Democrat appointed to the board last year, said the settlement didn’t match the company’s potential legal exposure considering its $55.8 billion in revenue in 2018 alone, and does not go far enough to change the company’s allegedly deceptive practices.

He pointed to the impact Facebook had on U.S. elections and the profit motive for disregarding Americans’ privacy as impetus to do more than his colleagues allowed – including holding members of the company’s executive board legally responsible.

“Citizens and societies around the world are seeing how major technology platforms are not bringing us closer together in the way we thought they would,” Chopra said in a dissenting statement. “The behavioral advertising business model is broken, and we cannot let it continue to tear us apart.”

Zuckerberg took to his platform Wednesday morning to acknowledge the settlement and promised to do more.

“As we build our privacy-focused vision for the future of social networking that I outlined earlier this year, it’s critical we get this right,” he wrote. “The next focus for our company is to build privacy protections as strong as the best services we provide. I’m committed to doing this well and delivering the best private social platform for our community.”

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