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FTC hits Facebook officially with record $5 billion fine

By Clyde Hughes
FTC hits Facebook officially with record $5 billion fine
The Federal Trade Commission fined Facebook a record $5 billion for breaking a 2012 agreement on privacy violations. File photo by John Angelillo/UPI | License Photo

July 24 (UPI) -- The Federal Trade Commission charged Facebook on Wednesday a record-breaking $5 billion penalty for violating a 2012 order by the commission related to fooling users about their ability to control the privacy of their personal information.

The FTC said the fine is the largest it has ever levied against a company for violating customers' privacy and nearly 20 times more than the old record penalty for data security violations globally.

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"Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers' choices," FTC chairman Joe Simons said in a statement. "The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC.

"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 commission takes consumer privacy seriously, and will enforce FTC orders to the fullest extent of the law," Simons said.

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Facebook collects user information for targeted advertising, which made up the majority of the social media giant's $55.8 billion in revenues in 2018. The FTC said it learned after a one-year investigation into Facebook that the company used deceptive disclosures and settings to undermine users' privacy preferences in violation of its 2012 order.

FTC said in its new 20-year settlement with Facebook, the company will change the way it makes privacy decisions by increasing the transparency of decision making and holding Facebook accountable with overlapping channels of compliance.

In a separate statement, Facebook founder Mark Zuckerberg said that the company has a "responsibility to protect people's privacy" and will create a new standard for the industry.

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"As part of this settlement, we're bringing our privacy controls more in line with our financial controls under the Sarbanes-Oxley legislation," Zuckerberg said. "Our executives, including me, will have to certify that all of the work we oversee meets our privacy commitments.

"Just as we have an audit committee of our board to oversee our financial controls, we'll set up a new privacy committee of our board that will oversee our privacy program. We've also asked one of our most experienced product leaders to take on the role of chief privacy officer for products," he said.

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Zuckerberg said Facebook will review its technical systems to find privacy risks in advance to how to eliminate them.

"We expect it will take hundreds of engineers and more than a thousand people across our company to do this important work," Zuckerberg said. "And we expect it will take longer to build new products following this process going forward.

"Overall, these changes go beyond anything required under U.S. law today. The reason I support them is that I believe they will reduce the number of mistakes we make and help us deliver stronger privacy protections for everyone."

Rep. David Cicilline, D-R.I., said earlier this month when news first broke about the settlement that the fine was light compared to what Facebook makes off the information.

"It's very disappointing that such an enormously powerful company that engaged in such serious misconduct is getting a slap on the wrist," said Cicilline, who is chairman of the House Judiciary antitrust subcommittee.

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