Facebook's $6.8b fine not harsh enough, say critics

The much-anticipated settlement still needs final approval in the coming weeks from the Justice Department, which rarely rejects settlements reached by the agency.
The much-anticipated settlement still needs final approval in the coming weeks from the Justice Department, which rarely rejects settlements reached by the agency. PHOTO: AFP

Penalty not sufficient to stop privacy violations, they say

WASHINGTON • The US Federal Trade Commission (FTC) has approved a US$5 billion (S$6.8 billion) fine on Facebook for mishandling users' personal information, according to three people briefed on the vote, in what would be a landmark settlement that signals a newly aggressive stance by regulators towards the country's most powerful technology firm.

The much-anticipated settlement still needs final approval in the coming weeks from the Justice Department, which rarely rejects settlements reached by the agency. It would be the biggest fine by far levied by the federal government against a technology company.

The size of the penalty underscored the rising frustration among Washington officials with how Silicon Valley giants collect, store and use people's information. It would also represent one of the most aggressive regulatory actions by the Trump administration, and a sign of the government's willingness to punish one of the country's biggest and most powerful companies.

But the decision has also prompted an immediate outcry from lawmakers and privacy advocates who said it did not go far enough. Although details of the settlement with the FTC were not announced, the fine is steep but far from devastating for Facebook.

The company, which reported revenue of almost US$56 billion last year, had set aside US$3 billion in anticipation of the fine.

"This reported US$5 billion penalty is barely a tap on the wrist, not even a slap," said Senator Richard Blumenthal, a Connecticut Democrat, who called for a hearing on the agreement. "Such a financial punishment for purposeful, blatant illegality is chump change for a company that makes tens of billions of dollars every year," he said.

In addition to the fine, Facebook agreed to more comprehensive oversight of how it handles user data, according to the people.

 
 

Ms Charlotte Slaiman of consumer group Public Knowledge thinks it is unlikely the restrictions will be overly harsh.

"We don't yet know key aspects of the settlement: whether Facebook must make any changes to its business model or practices as a result," said Ms Slaiman, the group's competition policy counsel. "By itself, this fine will not be sufficient to change Facebook's behaviour."

The outlook was a bit more optimistic at the Centre for Democracy and Technology, whose president Nuala O'Connor said the fine underscored the importance of "data stewardship" in the digital age. She added: "The FTC has put all companies on notice that they must safeguard personal information."

But none of the conditions in the settlement will impose strict limitations on Facebook's ability to collect and share data with third parties. And that decision appeared to help split the five-member commission. The 3-2 vote, taken in secret last week, drew the dissent of the two Democrats on the commission because they sought stricter limits on the company, the people said.

The FTC's investigation was set off by The New York Times and The Observer of London, which uncovered the fact that the social network had let Cambridge Analytica, a British consulting firm used by Mr Donald Trump's presidential campaign, harvest personal information of its users. The firm used the data to build political profiles about individuals without the consent of Facebook users.

The agency found that Facebook's handling of user data violated a 2011 privacy settlement with the FTC. That earlier settlement, which came after the company was accused of deceiving people about how it handled their data, required the company to revamp its privacy practices.

Spokesmen for the FTC and for Facebook declined to comment.

NYTIMES, BLOOMBERG, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Sunday Times on July 14, 2019, with the headline 'Facebook's $6.8b fine not harsh enough, say critics'. Print Edition | Subscribe