Facebook’s historic $5bn FTC settlement branded a "sweetheart deal"

Critics worry this is a missed opportunity to change Facebook's data practices after the Cambridge Analytica scandal

The Federal Trade Commission (FTC) will levy a $5 billion fine against Facebook as part of a wider settlement agreed following an investigation into the Cambridge Analytica data-sharing scandal.

Subject to final approval by the US Justice Department, Facebook will face the largest financial penalty a tech firm has been handed by a government regulator for breaching data protection laws. The fine is many multiples larger than the French data protection authority's 44 million fine against Google earlier this year for violating the General Data Protection Regulation (GDPR), which stood as the largest fine officially levied until now.

The agreement, which was reached following months of negotiations between two parties, also sees Facebook subject to greater oversight, according to the New York Times (NYT). But the social media giant will not be restricted in the ways it shares users' data with third-parties.

Many, including the Observer journalist Carole Cadwalladr who initially broke the Cambridge Analytica story, have branded the settlement inadequate. Cadwalladr herself described the agreement as "a sweetheart deal", declaring that Facebook "is well and truly out of control".

The $5 billion fine represents approximately 9% of Facebook's annual turnover for 2018, more than double the maximum GDPR penalty an EU regulator can levy against the company.

But Facebook's share price actually rose as the news broke on Friday, with investors pleased the FTC's investigation will soon conclude without spilling out into a lengthy saga that dominates newspaper headlines. Moreover, the company has cash reserves of more than $40 billion, the NYT claims.

The settlement was agreed by a 3-2 majority vote of the FTC's board split based on party lines, with Republicans in favour and Democrats against.

Facebook was also found to have violated a previous settlement with the FTC struck in 2011 after the firm was required to change its privacy policies following widespread criticism.

Following the launch of its investigation into Facebook's data practices in March 2018, the US regulator had been expected to levy a fine against Facebook in the region of $3 billion to $5 billion. The outcome of the settlement negotiation was also previously thought to include a clause in which federally-appointed privacy executives would be injected into the highest levels of the company, yet this has yet to materialise.

The UK's Information Commissioner's Office (ICO) previously fined Facebook 500,000 for violating the Data Protection Act 1998 in the wake of the Cambridge Analytica scandal. This was the maximum fine that could be handed to the firm under legislation that applied prior to GDPR's introduction.

Data protection authorities in the EU, meanwhile, are still probing Facebook for a handful of GDPR violations, namely the Irish data regulator which is currently pursuing ten investigations against the firm.

Featured Resources

Security analytics for your multi-cloud deployments

IBM Security QRadar SIEM solution brief

Download now

Five reasons to move to the cloud

Join the enterprises moving their workloads to the cloud

Download now

Architecting hybrid IT and edge for digital advantage

Why business leaders should consider a hybrid IT strategy

Download now

Six reasons to accelerate remote asset monitoring with AI

How to optimise resources, increase productivity, and grow profit margins with AI

Download now

Recommended

Four tips for keeping your business secure during mass remote work
data protection

Four tips for keeping your business secure during mass remote work

19 Feb 2021
Cost of a data breach report 2020
Whitepaper

Cost of a data breach report 2020

2 Feb 2021
10 ways to protect your company from the next big data breach
data breaches

10 ways to protect your company from the next big data breach

28 Jan 2021
Misconfigured Git servers lead to Nissan data leak
hacking

Misconfigured Git servers lead to Nissan data leak

7 Jan 2021

Most Popular

Mysterious Silver Sparrow malware hits 30,000 macOS devices
malware

Mysterious Silver Sparrow malware hits 30,000 macOS devices

22 Feb 2021
IBM reportedly mulls sale of Watson Health business
mergers and acquisitions

IBM reportedly mulls sale of Watson Health business

22 Feb 2021
Hackers publish Bombardier data in wide-reaching FTA cyber attack
cyber attacks

Hackers publish Bombardier data in wide-reaching FTA cyber attack

24 Feb 2021