Facebook To Pay Record $5bn Fine For FTC Settlement

Facebook is to pay a record $5bn fine for privacy violations, the US Federal Trade Commission (FTC) announced on Wednesday.

Along with the record fine, Facebook will also have to submit to new restrictions and a modified corporate structure, after ‘repeated violations’ of its 2012 agreement with the FTC.

In April Facebook revealed it had set aside $3bn to pay any fine imposed by the FTC over the Cambridge Analytica scandal. But almost immediately reports began to suggest that Facebook would have to pay closer to $5bn to reach a settlement.

Record Fine

It is perhaps no surprise then the FTC imposed its $5bn fine, after the social networking giant found itself at the centre of a number of ongoing problems.

Earlier in the year for example it admitted that it had “unintentionally uploaded” email contacts of 1.5 million new users since May 2016, without their knowledge or consent.

The firm is of course also in hot water over the Cambridge Analytica scandal from 2018.

Other issues include Facebook having to react quickly when it was discovered that public databases contained data on 540 million of its users were being held on an Amazon cloud server.

And Facebook has also admitted that “hundreds of millions” of passwords were stored on its internal server in plaintext, unprotected by any form of encryption whatsoever.

“Facebook, Inc. will pay a record-breaking $5 billion penalty, and submit to new restrictions and a modified corporate structure that will hold the company accountable for the decisions it makes about its users’ privacy, to settle Federal Trade Commission charges that the company violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information,” the regulator said.

“The $5 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 FTC said. “It is one of the largest penalties ever assessed by the US government for any violation.”

The FTC said that the settlement order “also imposes unprecedented new restrictions on Facebook’s business operations and creates multiple channels of compliance.”

Facebook is also required to restructure its approach to privacy from the corporate board-level down, and Facebook executives will be held accountable for the decisions they make about privacy.

Data privacy

“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices,” said FTC Chairman Joe Simons.

“The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC,” he said. “The relief is designed not only to punish future violations but, more importantly, to change Facebook’s entire privacy culture to decrease the likelihood of continued violations.”

In March Zuckerberg outlined a “vision” for the future of social media that he said would hinge on privacy.

Facebook has also called for more regulation of internet firms in general.

Zuckerberg had called for an international framework that would “establish a way to hold companies such as Facebook accountable by imposing sanctions when we make mistakes”.

Quiz: Think you know all about Facebook?

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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