US FTC slaps $5 billion fine on Facebook
25 Jul 2019
A hefty $5-billion fine was slapped on Facebook by the US Federal Trade Commission, which accused it of adopting a deceptive data policy in relation to tens of millions of users.
The FTC voted 3-2, with three Republican commissioners calling the move “a complete home run and better than any likely court award. But the Democratic commissioners felt the fine was not large enough.
Joe Simons, the Republican FTC chairman said the commission did not have the option of raising the fine to $10 billion. “We cannot impose such things by our own fiat,” he said.
But Rohit Chopra, the Democratic FTC commissioner bemoaned that the decision gave “blanket immunity” to Facebook executives and there was no real restraint on its business model.
The Securities and Exchange Commission (SEC) revealed that FB had agreed to pay an additional $100 million to settle allegations that it had misled investors about the seriousness of its misuse of users’ data.
FB confirmed that it would pay the $5-billion fine. Mark Zuckerberg, the co-founder and chairman and CEO, Facebook, in a long note to those who follow him on the social media site, elaborated on the penalty.
Noting that this was an important quarter for the group, he said there were “more than 2.7 billion people using Facebook, Instagram, WhatsApp or Messenger each month, and more than 2.1 billion people who use at least one of our services each day.”
Referring to the settlement with the FTC over privacy concerns, Zuckerberg said the company would make major changes to how it builds services. “This will require investing a significant amount of our engineering resources in building tools to review our products and the ways we use data. It will also significantly increase our accountability by bringing the process for auditing our privacy controls more in line with how financial controls work at public companies with Sarbanes Oxley,” he said.
He admitted all these measures were a major shift for Facebook. “We build services that billions of people trust every day to communicate with the people they care about. Privacy has always been important to the services we provide, and now it’s even more central to our future vision for social networking.”
It was critical that “we get this right, and we're going to build it into all of our systems. It's going to take time to do this properly, and I expect it will take us longer to ship new products, especially while we're getting this up and running. I also expect that, just as with the work we have been doing on safety and integrity, we’re going to continue to identify and fix issues as we develop our systems.”
According to him, the top priority for FB was making progress on major social issues facing the internet including privacy, elections, harmful content, data portability, and more.
“In all these areas, I've advocated the internet would benefit from governments setting clearer rules,” said Zuckerberg. “I don't believe it's sustainable for private companies to be making so many decisions on social issues without a robust democratic process. Either the right regulations will get put into place, or we expect frustration with our industry will continue to grow.”
Interestingly, under the settlement with the FTC, it was decided that the company would set up an independent privacy committee without the “unfettered control” of Zuckerberg relating to decisions affecting user privacy.