Facebook fined $5B by the US govt for violating consumer privacy
The penalty imposed on Facebook by the US FTC is the largest ever on any corporate across the globe. The company will also have to follow new guidelines on how they handle consumers data
Global social media giant Facebook will pay a record breaking fine of $5 billion imposed by the US Federal Trade Commission (FTC). This is the largest ever penalty on any company across the world and Facebook will now have to follow new restrictions to make it accountable about users’ privacy.
“The $5 billion penalty against Facebook is the largest ever imposed on any company for violating consumers’ privacy and almost 20 times greater than the largest privacy or data security penalty ever imposed worldwide. It is one of the largest penalties ever assessed by the US government for any violation,” a press release from FTC said.
The settlement order also imposed unprecedented new restrictions on Facebook’s business operations and creates multiple channels of compliance. The order requires the social media giant to restructure its approach to privacy from the corporate board-level down.
The company has to establish strong new mechanisms to ensure that its executives are accountable for the decisions they make about privacy, and that those decisions are subject to meaningful oversight.
“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices,” said FTC Chairman Joe Simons. “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.”
According to FTC, more than 185 million people in the United States and Canada use Facebook on a daily basis. The company monetises user information through targeted advertising, which generated most of its $55.8 billion in revenues in 2018. To encourage users to share information on its platform, Facebook promises users they can control the privacy of their information through privacy settings.
Following a yearlong investigation by the FTC, the Department of Justice will file a complaint on behalf of the Commission alleging that Facebook repeatedly used deceptive disclosures and settings to undermine users’ privacy preferences in violation of its 2012 FTC order.
These tactics allowed the company to share users’ personal information with third-party apps that were downloaded by the user’s Facebook “friends.” The FTC alleges that many users were unaware that Facebook was sharing such information, and therefore did not take the steps needed to opt-out of sharing.
In addition, the FTC alleges that the social media giant took inadequate steps to deal with apps that it knew were violating its platform policies.
In a related, but separate development, the FTC also announced separate law enforcement actions against data analytics company Cambridge Analytica, its former Chief Executive Officer Alexander Nix, and Aleksandr Kogan, an app developer who worked with the company, alleging they used false and deceptive tactics to harvest personal information from millions of Facebook users.
(Edited by Saheli Sen Gupta)