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FTC Approves Fine of Roughly $5 Billion Against Facebook for Privacy Violations

July 15, 2019

The New York Times reported on July 12th that the Federal Trade Commission (FTC) has approved a fine of roughly $5 billion against Facebook for mishandling users’ personal information, according to three people briefed on the vote, in what would be a landmark settlement that signals a newly aggressive stance by regulators toward the country’s most powerful technology companies.

The much-anticipated settlement still needs final approval from the Justice Department, which rarely rejects settlements reached by the FTC. It would be the biggest fine by far levied by the federal government against a technology company, eclipsing the $22 million imposed on Google in 2012. The size of the penalty underscored the rising frustration among Washington officials with how large technology companies collect, store and use people’s information.

It would also be one of the most aggressive regulatory actions by the Trump administration, and a sign of the government’s willingness to punish one of the country’s biggest and most powerful companies. President Trump has dialed back regulations in many industries, but the Facebook settlement sets a new bar for privacy enforcement by United States officials, who have brought few cases against large technology companies.

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 impose strict limitations on Facebook’s ability to collect and share data with third parties. That decision appeared to help split the five-member commission. The 3-to-2 vote, taken in secret this week, reportedly drew the dissent of the two Democrats on the commission because they sought stricter limits on the company.

The FTC's investigation was fueled by The New York Times and The Observer of London, which discovered that the social network allowed Cambridge Analytica, a British consulting firm to the Trump campaign, to harvest personal information of its users. The firm used the data to build political profiles about individuals without the consent of Facebook users.

The agency found that Facebook’s handling of user data violated a 2011 privacy settlement with the FTC. That earlier settlement, which came after the company was accused of deceiving people about how it handled their data, required the company to revamp its privacy practices.

Despite all the criticism of Facebook, it has continued to do well financially. It had more than $55 billion in revenue in 2018 — 10 times the amount of the fine approved by the commission — as the digital advertising industry has consolidated to increasingly drive dollars to a handful of tech companies.

After the FTC fine was revealed, Facebook's stock price rose, which is evidence enough for me that this fine fundamentally constitutes a slap on the wrist for a company whose privacy violations are legion.

Sharon D. Nelson, Esq., President, Sensei Enterprises, Inc.
3975 University Drive, Suite 225|Fairfax, VA 22030
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