Facebook thumbs down

Facebook slapped with record £4bn fine over privacy violations

Image credit: Image Source

The US Federal Trade Commission (FTC) has handed down a fine of $5bn (£4bn) to Facebook for a series of privacy violations, in addition to enforcing strict new oversight rules.

The FTC opened its investigation into Facebook last year following the Cambridge Analytica data scandal.

As part of the settlement, Facebook chief executive Mark Zuckerberg will now regularly have to personally certify that his company is compliant with privacy measures. Facebook must also submit quarterly privacy reviews to show that its new measures are working. Failure to comply could see Zuckerberg facing civil or even criminal penalties, the FTC said.

These stipulations are part of what the FTC called "unprecedented new restrictions on Facebook's business operations", which will create "multiple channels of compliance" that will ensure company executives are accountable for privacy decisions.

The fine is the largest ever imposed on a company for violating consumer privacy, the FTC said.

FTC chairman Joe Simons said: "Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers' choices.

"The magnitude of the $5bn 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."

In response, in the form of a statement posted to his personal Facebook page, Zuckerberg said: "We've formally reached a settlement with the Federal Trade Commission about privacy. We've agreed to pay a historic fine, but even more important, we're going to make some major structural changes to how we build products and run this company.

"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 programme.

"We've also asked one of our most experienced product leaders to take on the role of chief privacy officer for products."

In the settlement filing, the FTC said Facebook's fine was due to the firm violating a previous order from the Commission by deceiving users about their ability to control the privacy of their personal information.

The Commission alleges that Facebook failed to protect user data from third-parties, misled some users over a facial-recognition feature being turned off by default and used phone numbers provided by users for security reasons to serve adverts.

Facebook has to both pay the £4bn fine and introduce the new privacy measures in order to settle the charges to the satisfaction of the FTC.

The social network will now have to carry out privacy audits on any new or updated product it launches which uses data, documenting any risks and how it plans to mitigate them.

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

"Overall, these changes go beyond anything required under US 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."

The FTC also announced a lawsuit against Cambridge Analytica and said it had reached settlements with the data analysis firm's former chief executive Alexander Nix and app developer Aleksandr Kogan, who worked with the company and whose personality quiz app was linked to the Facebook data scandal.

Both men have agreed to a settlement which will restrict how they conduct any business in the future and requires them to delete or destroy any personal data they collected, the agency said.

As if the huge record fine wasn't sufficiently embarrassing for Facebook, it has also emerged that the company is being investigated over anti-trust concerns. The social network firm said that it was informed in June of the probe by the FTC – the same agency that levied the unprecedented fine for Facebook's privacy violations.

In a statement, Facebook confirmed: "The online technology industry and our company have received increased regulatory scrutiny in the past quarter. In June 2019, we were informed by the FTC that it had opened an anti-trust investigation of our company. In addition, in July 2019, the Department of Justice announced that it will begin an anti-trust review of market-leading online platforms."

Despite a deluge of seemingly bad publicity over the past 12 months, Facebook was delighted to reveal burgeoning revenue of $16.9bn (£13.4bn) for the three months up to 30 June 2019, an increase of more than £3bn of the total achieved during the same period in 2018.

Facebook users also appear undeterred by the increased scrutiny, with daily active users averaging around 1.59 billion in June 2019, with monthly active users at 2.41 billion, both marking an increase of 8 per cent year-over-year.

Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.

Recent articles