By Kunle Adedoyin
The US Federal Trade Commission (FTC) has ordered Facebook to pay a record-breaking $5 billion fine and adopt new protections for data users share on the social network as part of a settlement of allegations against the company of breaking a previous agreement over privacy protections.
FTC also ordered that the social networking giant must expand its privacy protections across Facebook, Instagram and WhatsApp, and adopt a corporate system of checks and balances to remain compliant.
Facebook must also maintain a data security program, which includes protections of information such as users’ phone numbers.
The FTC’s order also curbs CEO Mark Zuckerberg’s oversight in privacy and security matters, with the requirement Facebook create a new privacy committee with independent board members who cannot be removed without a two-thirds shareholder vote.
Zuckerberg and designated compliance officers each must submit individual quarterly compliance reports to the FTC.
Additionally, a third-party assessor will monitor Facebook’s privacy-related decisions going forward.
The commission approved the settlement with a 3-2 vote, with the dissenting commissioners wanting tougher action taken against Zuckerberg.
Joe Simons, FTC Chairman and the commissioners Noah Joshua Phillips and Christine Wilson, who approved the settlement in their lengthy statement said the order achieves more than the FTC could have achieved by going to court.
“The Order significantly diminishes Mr. Zuckerberg’s power – something no government agency, anywhere in the world, has thus far accomplished,” the statement says.
“The provisions of this Order extinguish the ability of Mr. Zuckerberg to make privacy decisions unilaterally by also vesting responsibility and accountability for those decisions within business units, DCOs (digital compliance officers), and the privacy committee.”
Previously, the FTC’s highest fines were to Google, which paid $22.5 million in 2012 and Upromise, which paid $500,000 in 2017.
Facebook, in a statement agreed to the new settlement.
“In reaching the settlement, Facebook has agreed to pay a $5 billion penalty, which is one of the largest in history. But even more important, Facebook will make some major changes to how it builds products and operates as a company,” the company said.
This settlement concludes a year-long FTC investigation, prompted by the 2018 Cambridge Analytica scandal.
Facebook suspended the data analysis and political consulting firm in March 2018 for improper access to user data.
That move came after The New York Times and The Observer said Cambridge Analytica had access to 50 million profiles and used them to target ads during the 2016 presidential election campaign.
At the time, Facebook said it knew the firm had violated its policies by obtaining and secretly passing on the data, which users had agreed to share with a personality prediction app.
FTC also announced separate settlements with Cambridge Analytica, its former CEO Alexander Nix, and Aleksandr Kogan, an app developer who worked with the company. The actions alleged Cambridge “used false and deceptive tactics to harvest personal information from millions of Facebook users” and all face restrictions on future business.