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Facebook To Pay Record $5 Billion Fine In FTC Settlement

Courtesy of ZeroHedge. View original post here.

As extensively leaked in advance, on Wednesday morning Facebook agreed to pay a record $5 billion fine to resolve a long-running federal investigation that has damaged the company’s standing with consumers and clouded its future, and agreed to better police its data-privacy practices,

Under the settlement, Facebook founder and CEO Mark Zuckerberg will be required to certify that the company is in compliance with new privacy strictures, and could be subject to civil and criminal penalties for false certifications.

"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 Federal Trade Commission said in a news release. “It is one of the largest penalties ever assessed by the U.S. government for any violation."

To many the penalty, which is a fraction of what Facebook makes in one year, was merely a token wristslap, and will do nothing to change the company's entrenched culture, which in recent months has seen Facebook proactive seek out to censor free speech on its website, especially when it comes from conservative voices.

To be sure, as the WSJ notes, the extent of the fine was blunted by stinging dissents from the two Democrats on the five-member commission, who said the financial penalty was insufficient and the settlement does little to change Facebook’s basic incentives to gather and leverage users’ data.

“The settlement imposes no meaningful changes to the company’s structure or financial incentives, which led to these violations,” commissioner Rohit Chopra said in a statement. “Nor does it include any restrictions on the company’s mass surveillance or advertising tactics.”

“Rather than accepting this settlement, I believe we should have initiated litigation against Facebook and its CEO Mark Zuckerberg,” said commissioner Rebecca Kelly Slaughter.

That, however, was not meant to happen as few in Congress and elsewhere dare to challenge what has become the world's most powerful media company.

The Republican board majority led by Chairman Joe Simons said that suing Zuckerberg for past violations wouldn’t serve the public interest.

“Mr. Zuckerberg will be held accountable for certifying quarterly—under threat of civil and criminal penalties—that the company’s privacy program is in compliance with the order,” the FTC’s majority wrote. “The relief we have achieved today solves concrete problems, rather than venting frustration with individuals.”

In a separate matter, the SEC was set to announce a settlement with Facebook— including a fine of more than $100 million — over claims it insufficiently warned investors that developers and other third parties may have obtained users’ data without their permission or in violation of Facebook policies, according to a person familiar with the matter. Facebook neither admitted nor denied the SEC's claims.

The settlement with the FTC requires creation of a new committee of Facebook’s board to monitor the company’s privacy practices. Legal experts said they couldn’t recall prior FTC privacy settlements imposing such a requirement. “If the committee had appropriate authority and was answerable to the FTC, it could have a significant impact,” David Vladeck, a former head of the agency’s consumer protection bureau during the Obama administration, said on Monday before the agreement’s announcement.

The order also requires Facebook to report to the FTC incidents where data of 500 or more users has been compromised, along with the company’s efforts to address the problems, and to deliver the documentation within 30 days.


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