After being in the spotlight for quite some for its involvement in several data leak cases, Facebook has been awarded a settlement fine of $5 billion (approx Rs 35,000 crore). The fine was imposed by the Federal Trade Commission (FTC) after it concluded an investigation into the Cambridge Analytica scandal and other privacy breaches in which the social media giant was mired in. The US government agency also told the company to establish an independent privacy committee that Mark Zuckerberg, Facebook Chief Executive Officer, will not have control over. The FTC alleged that Facebook violated the law by failing to protect users’ data from third parties, serving ads through the use of phone numbers provided for security, and lying to users that its facial recognition software was turned off by default.
“The Commission’s career enforcement staff conducted an extremely thorough investigation for over a year that focused on all potential violations of the FTC’s 2012 order and Section 5 of the FTC Act. The sweeping settlement announced today is based on the staff’s recommendation, and includes three major components: a record-breaking $5 billion penalty; new substantive privacy and data security requirements; and significant structural reforms to ensure greater corporate accountability, more rigorous compliance monitoring, and increased transparency,” FTC said in a joint statement by Chairman Joe Simons, and Commissioners Noah Joshua Phillips and Christine S. Wilson.
The fine is said to be the biggest ever imposed on any company for violating its consumers' privacy. The $5 billion penalty is approximately 9 percent of Facebook’s 2018 revenue and approximately 23 percent of its 2018 profit. FTC also told Facebook to enforce its platform terms against app developers on the basis of the severity of the violation. “Pursuant to the Order, Facebook must expand its existing privacy program to cover WhatsApp and any Facebook product or service that receives personal information from Facebook, WhatsApp and Instagram. Moreover, this is the first FTC order to address biometric information, requiring Facebook to get consumers’ option consent before using or sharing such information in ways that exceed prior disclosures and consents,” the FTC said.
While the settlement announced is based on the FTC staff’s recommendation, for some Democratic FTC commissioners, the penalty imposed on the company is just a way to get out of trouble. “The settlement’s $5 billion penalty makes for a good headline...but the terms and conditions, including blanket immunity for Facebook executives and no real restraints on Facebook’s business model, do not fix the core problems that led to these violations. The settlement imposes no meaningful changes to the company’s structure or financial incentives nor does it include any restrictions on the company’s mass surveillance or advertising tactics. Instead, the order allows Facebook to decide for itself how much information it can harvest from users and what it can do with that information, as long as it creates a paper trail,” FTC commissioner Rohit Chopra said.
Meanwhile, Facebook reiterated that it had made large strides in privacy, had given people more control over their data, and had closed down apps and applied more resources in protecting people’s information. “But even measured against these changes, the privacy program we are building will be a step change in terms of how we handle data. We will be more robust in ensuring that we identify, assess and mitigate privacy risk. We will adopt new approaches to more thoroughly document the decisions we make and monitor their impact. And we will introduce more technical controls to better automate privacy safeguards. As part of this effort, we will be undertaking a review of our systems,” Facebook said in a statement.
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