Published: Sat, July 13, 2019
Economy | By

Facebook $5B Settlement Is Approved By Federal Trade Commision; Stock Rises

Facebook $5B Settlement Is Approved By Federal Trade Commision; Stock Rises

The FTC announced past year it reopened its investigation into a 2011 privacy settlement with Facebook after revelations that personal data on tens of millions of users was hijacked by the political consultancy Cambridge Analytica, working on the Donald Trump campaign in 2016.

"A 3-2 vote along party lines is definitely not ideal for an FTC settlement of this magnitude", Ashkan Soltani, a former chief technologist at the FTC, wrote on Twitter Friday.

The FTC opened its Facebook probe in March 2018, following reports that Cambridge Analytica had hoovered up the personal data of almost 90 million Facebook users to better target them with political ads during the 2016 presidential election. The fine would be the largest the FTC has levied on a tech company.

The settlement would be the largest civil penalty ever paid to the agency.

That's also the year Facebook entered into a consent degree with the FTC over - stop me if this sounds familiar - user privacy violations.

The long-expected punishment, which Facebook is well prepared for, is unlikely to make a dent in the social media giant's deep pockets. It's unclear how long the process would take, though it is likely to be approved.

Facebook also faces a lawsuit from the D.C. attorney general and other states over the privacy debacle. Around the time the news broke this afternoon, Facebook share prices jumped from around $202 per share to $205.27, its highest price in the past year, and the sort of spike that often signals confidence from Wall Street.

"Something clearly has to be done to strengthen the data protection practices of that company", said Marc Rotenberg, president of the Electronic Privacy Information Center, which filed a complaint against Facebook that led to the FTC's 2011 consent decree with the social-media company that addressed a litany of deceptive practices. But Facebook is still in business, and $5 billion won't even scratch the surface of the company's coffers. That decision appeared to split the five-member commission: The two Democrats who voted against the deal sought stricter limits on the company, the people said.

Facebook told investors in April that it expected fines from the investigation to be between $3 billion and $5 billion.

The final settlement is supposedly directly related to a scandal involving London-Based Cambridge Analytica as well as a series of leaks of app users private records onto a public database, which is prohibited by Facebook's own policies.

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