The world already knows that Facebook is not a company to trust with data. With years of admission by the company of their “deceptive” privacy policies, the Federal Trade Commission is out to impose its most significant monetary penalty in history against Facebook – and that’s $5 billion.
The Federal Trade Commission (FTC) announced, Wednesday, that they will be imposing the multi-billion fine against Facebook for the company’s inability to protect consumer data and about one of the prominent disclosure of user data to a private firm.
Facebook has since been criticized for their privacy practices, and there has been a continuous call from Washington for tech companies to become more transparent and accountable with their data handling policies – especially that these companies influence social movements and as well as personal privacy.
The deal was signed between the FTC and Facebook, following the years of admission that the company has been a major stakeholder involved in massive breaches of data, including the damning disclosure of information of more than 87 million users to the political analysis firm Cambridge Analytica.
The fine is what resolves the FTC complaint that Facebook “used deceptive disclosures and settings” putting people’s privacy in a compromising position and violating the signed agreement with FTC in 2012.
Aside from using confusing and deceptive disclosure, the FTC also alleges Facebook of using the phone numbers provided by users upon sign up to help advertisers target their customers amidst the inability of Facebook to let their users know that such thing is being done. Furthermore, the FTC is also accusing Facebook of defrauding “tens of millions of users” with its facial recognition feature where some of the users don’t necessarily have an opt-out option and that the feature was turned on by default.
“The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC,” said Chairman Joseph Simons in a statement. “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 decision of the FTC to impose a massive fine against a tech company could be the start of the government’s crackdown against tech companies who have questionable business and privacy policies.
What does the settlement mean for Facebook?
Aside from the $5 billion fine, Facebook also agreed to let the Federal Trade Commission to have greater oversee on the company’s privacy policies. Facebook decided to form an independent privacy oversight committee whose members are independently elected to their positions and cannot be fired by Facebook’s founder and CEO, Mark Zuckerberg.
The oversight committee formed after the agreement will be the one in charge of looking for people who will routinely check and certify if Facebook is compliant with the terms of the deal, or risk being held accountable themselves. Mark Zuckerberg, himself should also make these certifications.
“False certifications would subject Mr. Zuckerberg and the [designated compliance officers] to personal liability, including civil and criminal penalties,” said FTC Chair Joseph Simons ina a statement written jointly with the Commission’s two other Republican members, Christine Wilson, and Noah Phillips.
Moreover, Facebook also agreed to allow a third-party assessment of its privacy policies moving forward. This independent assessment was said to heavily rely on their fact-finding investigation instead of the data provided by Facebook.
The fine is too low for Facebook
Nonetheless, even if it seems like the $5 billion penalties are vast, it only covers about a month of Facebook’s revenue, and many analysts argue that this settlement will not even crack the company up. The solution was voted 3-2 in the FTC with two Democrats who dissented stated that the fine did not go enough, highlighting the fact that Facebook can afford to pay up the penalty without making a dent to the company.
Commissioners Rohit Chopra and Rebecca Slaughter, who dissented in the settlement, said that the penalty was too small and is tantamount to FTC giving Facebook a free pass.
“Failing to hold them accountable only encourages other officers to be similarly neglectful in discharging their legal obligations,” wrote Chopra. “In my view, it is appropriate to charge officers and directors personally when there is a reason to believe that they have meaningfully participated in unlawful conduct, or negligently turned a blind eye toward their subordinates doing the same.”