Saturday, July 13, 2019
FTC Approves Roughly $5B Facebook Settlement
The U.S. Federal Trade Commission approved a roughly $5 billion settlement with Facebook Inc this week over its investigation into the social media company’s handling of user data, a source familiar with the situation said on Friday.
According to Reuters, the FTC has been investigating allegations Facebook inappropriately shared information belonging to 87 million users with the now-defunct British political consulting firm Cambridge Analytica. The probe has focused on whether the data sharing violated a 2011 consent agreement between Facebook and the regulator.
Investors cheered news of the deal and pushed Facebook shares up 1.8%, while several powerful Democratic lawmakers in Washington condemned the proposed penalty as inadequate.
The FTC is expected to include in the settlement other restrictions on how Facebook treats user privacy, according to the Wall Street Journal, which also said that the agency vote was along party lines, with three Republicans voting to approve it and two Democrats opposed.
The settlement would be the largest civil penalty ever paid to the agency.
Representative David Cicilline, a Democrat and chair of a congressional antitrust panel, called the $5 billion penalty “a Christmas present five months early.”
“This fine is a fraction of Facebook’s annual revenue. It won’t make them think twice about their responsibility to protect user data,” he said.
Facebook’s revenue for the first quarter of this year was $15.1 billion while its net income was $2.43 billion. It would have been higher, but Facebook set aside $3 billion for the FTC penalty.
Posted 4:24:00 AM