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FTC votes to approve $5 billion settlement with Facebook in privacy probe

The Washington Post logo The Washington Post 12/07/2019 Tony Romm

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The Federal Trade Commission voted this week to approve a roughly $5 billion settlement with Facebook that could end an investigation into its privacy practices, according to a person familiar with the matter but not authorized to speak on the record, a deal that could result in unprecedented government oversight of the company.

The settlement -- adopted with the FTC’s three Republicans supporting it and two Democrats against it -- could end a wide-ranging probe into Facebook’s mishandling of users’ personal information that began more than a year ago.

The FTC’s $5 billion punishment against Facebook sets a new record as the largest penalty ever assessed against a tech company that broke a past promise to the government to improve its privacy practices. The matter from here rests in the hands of the Justice Department, which typically must finalize FTC settlements, though DOJ rarely has upended them.

a close up of a sign: The Facebook Inc. logo is displayed for a photograph on an Apple Inc. iPhone in Washington, D.C., U.S., on Wednesday, March 21, 2018. Facebook is struggling to respond to growing demands from Washington to explain how the personal data of millions of its users could be exploited by a consulting firm that helped Donald Trump win the presidency. Photographer: Andrew Harrer/Bloomberg © Andrew Harrer/Bloomberg The Facebook Inc. logo is displayed for a photograph on an Apple Inc. iPhone in Washington, D.C., U.S., on Wednesday, March 21, 2018. Facebook is struggling to respond to growing demands from Washington to explain how the personal data of millions of its users could be exploited by a consulting firm that helped Donald Trump win the presidency. Photographer: Andrew Harrer/Bloomberg Facebook warned investors earlier this year it could face an FTC fine as high as $5 billion. Wall Street appeared to reward the company for setting aside a large portion of that penalty earlier this year, as the company’s stock rose almost 2 points following news of the settlement Friday. 

The FTC declined to comment on the matter. Facebook also declined to comment.

The FTC opened its investigation into Facebook in March 2018, responding to reports that the political consultancy Cambridge Analytica improperly accessed personal data of 87 million Facebook users, which critics charged had violated an agreement Facebook brokered with the FTC in 2011 to protect users’ privacy. Cambridge Analytica developed a quiz app that harnessed information on those who installed it as well as their friends, a form of data collection that Facebook had allowed under an earlier version of its privacy policy. Such information may have helped Cambridge Analytica create profiles of users so that clients could better target people with political messages.

Gallery: How your electronic devices are spying on you (Espresso)

But the FTC’s probe quickly expanded beyond the Cambridge Analytica incident to cover a torrent of other privacy and security abuses at Facebook, including the revelation that it had provided popular websites and the makers of some smartphones and other devices with access to users’ social data without adequately notifying them.

Under the FTC’s new settlement, the consequences for Facebook could be vast: The tech giant may have to document every decision it makes about data before offering new products, keep closer watch over third-party apps that tap users’ information, and require its top executives, including Facebook CEO Mark Zuckerberg, to attest that the company adequately has protected privacy. Facebook had agreed to broad contours of those terms as part of confidential settlement talks with the FTC, the Post reported earlier this year.

FILE - In this April 10, 2018, file photo, Facebook CEO Mark Zuckerberg testifies before a joint hearing of the Commerce and Judiciary Committees on Capitol Hill in Washington, about the use of Facebook data to target American voters in the 2016 election. Zuckerberg said Facebook will start to emphasize new privacy-shielding messaging services, a shift apparently intended to blunt both criticism of the company's data handling and potential antitrust action. (AP Photo/Andrew Harnik, File) © ASSOCIATED PRESS FILE - In this April 10, 2018, file photo, Facebook CEO Mark Zuckerberg testifies before a joint hearing of the Commerce and Judiciary Committees on Capitol Hill in Washington, about the use of Facebook data to target American voters in the 2016 election. Zuckerberg said Facebook will start to emphasize new privacy-shielding messaging services, a shift apparently intended to blunt both criticism of the company's data handling and potential antitrust action. (AP Photo/Andrew Harnik, File)

The new settlement would go far beyond the 2011 agreement Facebook brokered with the FTC. That accord required Facebook to give users greater choice about what happens to their data and inform them more clearly about how their personal information is used. The agreement also required Facebook to submit to 20 years of regular privacy checkups from outside watchdogs, though those reviewers never once flagged a major mishap at the company for the FTC to review.

The Wall Street Journal first reported details of the FTC’s vote.

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The decision by the commission’s two Democrats to vote against the settlement could suggest simmering frustrations that the FTC did not go far enough in the fine and other punishments it levied against Facebook to end the probe. But the alternative--if Facebook resisted brokering such a deal--could have forced the two sides to go to court in what could have a been a bruising legal battle over the social-networking giant’s data-collection practices and the government’s ability to regulate them.

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