Facebook fined record $7bn for privacy failures

Facebook has agreed to pay a ­record $US5bn ($7.16bn) fine and better police its data-privacy practices.

The settlement is expected to include a fine larger than $US100 million

Facebook has agreed to pay a ­record $US5 billion ($7.16bn) fine and better police its data-privacy practices to settle a long-running federal investigation that has damaged the company’s standing with consumers and clouded its future.

Under the settlement, Facebook founder and CEO Mark Zuckerberg will be required to certify that the company is in compliance with new privacy strictures, and could be subject to civil and criminal penalties for false certifications.

“The $US5 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,” the Federal Trade Commission said. “It is one of the largest penalties ever assessed by the US government for any violation.”

But the force of the decision was blunted by stinging dissents from the two Democrats on the five-member commission, who said the financial penalty was insufficient and the settlement did little to change Facebook’s basic incentives to gather and leverage users’ data.

“The settlement imposes no meaningful changes to the company’s structure or financial incentives, which led to these violations,” commissioner Rohit Chopra said. “Nor does it include any restrictions on the company’s mass surveillance or advertising tactics

Commissioner Rebecca Kelly Slaughter said: “Rather than ­accepting this settlement, I believe we should have initiated litigation against Facebook and its CEO Mark Zuckerberg.”

Taking note of the dissents, the Republican board majority led by chairman Joe Simons said that suing Mr Zuckerberg for past violations would not serve the public interest.

“Mr Zuckerberg will be held accountable for certifying quarterly — under threat of civil and criminal penalties — that the company’s privacy program is in compliance with the order,” the FTC’s majority wrote.

“The relief we have achieved today solves concrete problems, rather than venting frustration with individuals.”

The Securities and Exchange Commission was also expected to announce a settlement with Facebook overnight related to claims it inadequately disclosed risks ­involving its privacy practices, a person familiar with the matter said.

The settlement, which is expected to include a fine larger than $US100 million, focuses on allegations the social-media company insufficiently warned investors that developers and other third parties may have obtained users’ data without their permission or in violation of Facebook policies.

The SEC began probing Facebook after revelations that Cambridge Analytica, a data-analytics firm that had ties to President ­Donald Trump’s 2016 campaign, got access to information on millions of Facebook users.

Around that time, the SEC requested information from Facebook as it sought to understand how much the company knew about Cambridge Analytica’s use of the data and how Facebook analysed the risk it faced if developers were to share data with others in violation of its policies, The Wall Street Journal previously reported.

The settlement with the FTC requires creation of a new committee of Facebook’s board to monitor the company’s privacy practices. Legal experts said they couldn’t recall prior FTC privacy settlements imposing such a requirement.

The order also requires Facebook to report to the FTC incidents where data of 500 or more users has been compromised, along with the company’s efforts to address the problems, and to deliver the documentation within 30 days.