On Friday, July 12, The FTC voted to fine Facebook a record $5 billion for apparent violation of a a 2011 consent decree that required the company to better protect user privacy. This news came from reports in Wall Street Journal, New York Times and AP. The FTC final vote was 3-2.
In addition to the fine, “Facebook agreed to more comprehensive oversight of how it handles user data . . . But none of the conditions in the settlement will restrict Facebook’s ability to collect and share data with third parties,” the Times says. “And that decision appeared to split the five-member commission. The two Democrats who voted against the deal sought stricter limits on the company, the people [familiar with the proceeding] said.”
The FTC investigation against Facebook, which was triggered by the Cambridge Analytica scandal, lasted over a year before deciding to impose the record fine. With this penalty, it’s possible that there could be more aggressive enforcement by federal regulators toward technology companies in the absence of federal privacy legislation.The full term of the settlement could likely be disclosed this week.
Before this, the largest fine imposed by the FTC was a roughly $22 million penalty against Google in 2012 for circumventing no-third-party cookie default settings on the mobile Safari browser (“Cookiegate”).
Facebook saw this fine coming and was able to prepare shareholders during its most recent quarterly earnings release. The company put aside the $5 billion to pay for it. Because of this, the penalty was more than likely factored into the company’s stock price.
In the wake of Cambridge Analytica and other data-related controversies, Facebook has pivoted to more forcefully embrace privacy and regulation.