FILE - In this May 1, 2018, file photo, Facebook CEO Mark Zuckerberg delivers the keynote speech at F8, Facebook’s developer conference, in San Jose, Calif. Federal regulators are fining Facebook $5 billion for privacy violations and instituting new oversight and restrictions on its business. But they are only holding Zuckerberg personally responsible in a limited fashion. (AP Photo/Marcio Jose Sanchez, File)

FILE - In this May 1, 2018, file photo, Facebook CEO Mark Zuckerberg delivers the keynote speech at F8, Facebook’s developer conference, in San Jose, Calif. Federal regulators are fining Facebook $5 billion for privacy violations and instituting new oversight and restrictions on its business. But they are only holding Zuckerberg personally responsible in a limited fashion. (AP Photo/Marcio Jose Sanchez, File)

FTC fines Facebook $5B, adds limited oversight on privacy

Facebook isn’t admitting any wrongdoing as part of the settlement

Federal regulators have fined Facebook $5 billion for privacy violations and are instituting new oversight and restrictions on its business. But they are only holding CEO Mark Zuckerberg personally responsible in a limited fashion.

The fine is the largest the Federal Trade Commission has levied on a tech company, though it won’t make much of a dent for a company that had nearly $56 billion in revenue last year.

As part of the agency’s settlement with Facebook, Zuckerberg will have to personally certify his company’s compliance with its privacy programs. The FTC said that false certifications could expose him to civil or criminal penalties.

Some experts had thought the FTC might fine Zuckerberg directly or seriously limit his authority over the company.

“The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC,” Joe Simons, the chairman of the FTC, said in a statement. He added that the new restrictions are designed “to change Facebook’s entire privacy culture to decrease the likelihood of continued violations.”

Facebook isn’t admitting any wrongdoing as part of the settlement.

Two of the five commissioners opposed the settlement and said they would have preferred litigation to seek tougher penalties.

Facebook’s top lawyer, Colin Stretch, said the company’s FTC settlement will lead to more rigorous management of user privacy — including more technical controls to better automate privacy safeguards.

Facebook will also pay a separate $100 million fine to the Securities and Exchange Commission to settle charges it made misleading disclosures about the risk of misuse of Facebook user data. Though Facebook isn’t officially admitting wrongdoing there either, Stretch said in a blog post that Facebook should have disclosed more to investors.

The FTC opened an investigation into Facebook last year after revelations that data mining firm Cambridge Analytica had gathered details on as many as 87 million Facebook users without their permission. The agency said Wednesday that following its yearlong investigation of the company, the Department of Justice will file a complaint alleging that Facebook “repeatedly used deceptive disclosures and settings to undermine users’ privacy preferences.”

The SEC fine also pertains to Cambridge Analytica. The SEC said Facebook presented misuse of data as a hypothetical for two years even though it knew the third-party developer had actually misused user data. That misuse was discovered in 2015, according to the SEC, but Facebook did not correct its existing disclosure for more than two years. When the company disclosed the incident in March 2018 its stock price dropped.

Stretch said Facebook’s handling of the Cambridge Analytica affair was “a breach of trust between Facebook and the people who depend on us to protect their data.”

The FTC had been examining whether that massive breakdown violated a settlement that Facebook reached in 2012 after government regulators concluded the company repeatedly broke its privacy promises to users. That settlement had required that Facebook get user consent to share personal data in ways that override their privacy settings.

READ MORE: Facebook expects to pay up to $5 billion for privacy breaches

The FTC said Facebook’s deceptive disclosures about privacy settings allowed it to share users’ personal information with third-party apps that their friends downloaded but the users themselves did not give permissions to.

Privacy advocates have pushed for the FTC to limit how Facebook can track users — something that would likely cut into its advertising revenue, which relies on businesses being able to show users targeted ads based on their interests and behaviour. The FTC did not specify such restrictions on Facebook.

Three Republican commissioners voted for the fine while two Democrats opposed it, a clear sign that the restrictions on Facebook don’t go as far as critics and privacy advocates had hoped. That wish list included specific punishment for Zuckerberg, strict limits on what data Facebook can collect and possibly even breaking off subsidiaries such as WhatsApp and Instagram.

“The proposed settlement does little to change the business model or practices that led to the recidivism,” wrote Commissioner Rohit Chopra in his dissenting statement. He noted that the settlement imposes “no meaningful changes” to the company’s structure or business model. “Nor does it include any restrictions on the company’s mass surveillance or advertising tactics,” he wrote.

The fine is well above the agency’s previous record for privacy violations — $22.5 million — which it dealt to Google in 2012 for bypassing the privacy controls in Apple’s Safari browser. There have been even larger fines against non-tech companies, including a $14.7 billion penalty against Volkswagen to settle allegations of cheating on emissions tests and deceiving customers. Equifax will pay at least $700 million to settle lawsuits and investigations over a 2017 data breach; the FTC was one of the parties. The money will likely go to the U.S. Treasury.

The FTC’s new 20-year settlement with Facebook establishes an “independent privacy committee” of Facebook directors. The committee’s members must be independent, will be appointed by an independent nominating committee and can only be fired by a “supermajority” of Facebook’s board of directors. The idea is to remove “unfettered control” by Zuckerberg, the FTC said.

Since the Cambridge Analytica debacle erupted more than a year ago, Facebook has vowed to do a better job corralling its users’ data. Nevertheless, other missteps have come up since then.

In December, for example, the Menlo Park, California, company acknowledged a software flaw had exposed the photos of about 7 million users to a wider audience than they had intended. It also acknowledged giving big tech companies like Amazon and Yahoo extensive access to users’ personal data, in effect exempting them from its usual privacy rules. And it collected call and text logs from phones running Google’s Android system in 2015.

Amid all that, Zuckerberg and his chief lieutenant, Sheryl Sandberg, apologized repeatedly. In March, Zuckerberg unveiled a new, “privacy-focused” vision for the social network that emphasizes private messaging and groups based on users’ interests.

But critics and privacy advocates are not convinced that either a fine or Facebook’s new model amounts to a substantial change.

If the company’s business practices don’t change as result of the FTC’s action, “there is no benefit to consumers,” said Marc Rotenberg, the president and executive director of the Washington-based non-profit Electronic Privacy Information Center.

“The eight-year delay won’t be justified,” he said, referring to when Facebook first told the FTC it would do better.

The fine does not spell closure for Facebook, although the company’s investors — and executives — have been eager to put it behind them. Facebook is still under various investigations in the U.S. and elsewhere in the world, including the European Union, Germany and Canada. There are also broader antitrust concerns that have been the subject of congressional hearings, though it is too early to see if those will come to fruition.

Matt Stoller, a fellow at the Open Markets Institute, which has been critical of Facebook, said the company should admit wrongdoing.

“There should be structural solutions to force competition into the social networking market,” he added. “One of the angles for competition is privacy. They will compete to make a safer space to retain their user base.”

__

Ortutay reported from San Francisco. Associated Press writer Samantha Maldonado in San Francisco, Mae Anderson in New York, Matt O’Brien in Providence, Rhode Island, and Frank Bajak in Boston contributed to this story.

Marcy Gordon And Barbara Ortutay, The Associated Press


Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Saanich council approves of a five-story multi-family development at 300 Gorge Road West and 2900 Tillicum Road. (Rendering via Alan Lowe Architect Inc.)
Saanich approves five-story, mixed-use development for Tillicum area

Plans include 53 residential units, three commercial units at Tillicum Road, Gorge Road West

The fine for changing lanes or merging over a solid line costs drivers $109 and two penalty points in B.C. (Screenshot via Google Street View)
B.C. drivers caught crossing, merging over solid white lines face hefty fine

Ticket for $109, two penalty points issued under Motor Vehicle Act for crossing solid lines

Coun. Niall Paltiel of Central Saanich has filed a notice of motion directing staff to work with the WSANEC leadership council to develop a program leading toward the “gradual incorporation of traditional WSANEC names for key collector and arterial roads”(Black Press Media File)
Central Saanich councillor wants road signs to use WSANEC names

Coun. Niall Paltiel proposes ‘gradual incorporation of traditional WSANEC names’ for key roads

Royal Roads University president Philip Steenkamp said they are aware of hateful graffiti spray-painted in an area of the forest surrounding the campus. The graffiti in question includes anti-Semitic content and a racial slur towards Black people. (Facebook/Royal Roads University)
Anti-Semitic, hateful graffiti spotted in forest near Royal Roads University

Royal Roads working with West Shore RCMP to remove graffiti “as soon as possible”

A cougar was spotted at Royal Roads University on Sunday, Jan. 24. The sighting was reported on the western edge of the campus. (File photo)
Cougar spotted at Royal Roads University Sunday afternoon

Animal reported on western side of campus near Colwood Fire Department

U.S. Senator Bernie Sanders sits in on a COVID-19 briefing with Dr. Bonnie Henry, provincial health officer, and Adrian Dix, B.C. minister of health. (Birinder Narang/Twitter)
PHOTOS: Bernie Sanders visits B.C. landmarks through the magic of photo editing

Residents jump on viral trend of photoshopping U.S. senator into images

A woman injects herself with crack cocaine at a supervised consumption site Friday, Jan. 22, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Drug users at greater risk of dying as services scale back in second wave of COVID-19

It pins the blame largely on a lack of supports, a corrupted drug supply

Wet’suwet’en supporters and Coastal GasLink opponents continue to protest outside the B.C. Legislature in Victoria, B.C., on Thursday, February 27, 2020. THE CANADIAN PRESS/Chad Hipolito
‘We’re still in it’: Wet’suwet’en push forward on rights recognition

The 670-km Coastal GasLink pipeline was approved by B.C. and 20 elected First Nations councils on its path

The sky above Mt. Benson in Nanaimo is illuminated by flares as search and rescuers help an injured hiker down the mountain to a waiting ambulance. (Photo courtesy Nanaimo Search and Rescue)
Search plane lights up Nanaimo mountain with flares during icy rope rescue

Rescuers got injured hiker down Mt. Benson to a waiting ambulance Saturday night

Jennifer Cochrane, a Public Health Nurse with Prairie Mountain Health in Virden, administers the COVID-19 vaccine to Robert Farquhar with Westman Regional Laboratory, during the first day of immunizations at the Brandon COVID-19 vaccination supersite in Brandon, Man., on Monday, January 18, 2021. THE CANADIAN PRESS/Tim Smith - POOL
Top doctor urges Canadians to keep up with COVID measures, even as vaccines roll out

More than 776,606 vaccines have been administered so far

From the left: Midway RCMP Csts. Jonathan Stermscheg and Chris Hansen, Public Servant Leanne Mclaren and Cpl. Phil Peters. Pictured in the front are Mclaren’s dog, Lincoln and Peters’ dog, Angel. Photo courtesy of BC RCMP
B.C. Mounties commended for bringing firewood to elderly woman

Cpl. Phil Peters said he and detachment members acted after the woman’s husband went to hospital

Dr. Jerome Leis and Dr. Lynfa Stroud are pictured at Sunnybrook Hospital in Toronto on Thursday, January 21, 2021.THE CANADIAN PRESS/Frank Gunn
‘It wasn’t called COVID at the time:’ One year since Canada’s first COVID-19 case

The 56-year-old man was admitted to Toronto’s Sunnybrook Health Sciences Centre

An Uber driver’s vehicle is seen after the company launched service, in Vancouver, Friday, Jan. 24, 2020. Several taxi companies have lost a court bid to run Uber and Lyft off the road in British Columbia. THE CANADIAN PRESS/Darryl Dyck
Taxi companies lose court bid to quash Uber, Lyft approvals in British Columbia

Uber said in a statement that the ruling of the justice is clear and speaks for itself

Nanaimo Regional General Hospital. (News Bulletin file photo)
COVID-19 outbreak declared at Nanaimo hospital

Two staff members and one patient have tested positive, all on the same floor

Most Read