META Meta Platforms Inc

By John D. McKinnon 

WASHINGTON -- A long-awaited multibillion-dollar settlement between Facebook Inc. and federal regulators over privacy missteps has been bogged down by a split between Republicans and Democrats on the Federal Trade Commission, according to people familiar with the matter.

Facebook said April 24 that it was expecting to pay up to $5 billion in an accord with the FTC. At the time, people closely following the talks said a settlement was expected within days.

But over the past month, Republican Chairman Joseph Simons has struggled to win support for the deal from at least one of the panel's two Democrats, Rebecca Kelly Slaughter and Rohit Chopra, who are concerned the settlement won't be tough enough, according to one of the people familiar.

Consumer groups and others watching the talks say Mr. Simons wants a bipartisan decision to strengthen the FTC's credibility by underscoring its mission as a nonpartisan regulator.

A Republican-only decision could expose it to criticism by Democrats and diminish its impact for the enforcement agency, which has sometimes been criticized for being toothless on privacy in the past.

"Joe is trying in good faith not to make it 3-2," said Justin Brookman, director of consumer privacy and technology policy for Consumer Reports. "I think Joe's got a tough job and I give him credit for trying to bridge [differences]. That probably explains some of the delay."

Alysa Hutnik, who heads the privacy practice at the law firm Kelley Drye & Warren, said Mr. Simons "does really care about the credibility of the FTC and its mission and does not want that to be eroded.".

Mr. Simons, Ms. Slaughter and Mr. Chopra didn't respond to requests for comment, and an FTC spokeswoman declined to comment.

A Facebook spokeswoman said, "We hope to reach an appropriate and fair resolution."

The FTC investigation began more than a year ago after reports that personal data of tens of millions of Facebook users improperly wound up in the hands of Cambridge Analytica, a data firm that worked on President Trump's 2016 campaign. Since then, other missteps have continued to come to light, adding to the company's headaches.

Facebook, for its part, is eager to strike a deal and begin to put the scandal behind it, according to one of the people familiar and another person with knowledge of the situation.

One issue has been whether to name Facebook founder and CEO Mark Zuckerberg as a respondent in the complaint that would be filed by the agency as part of the settlement. Naming Mr. Zuckerberg as a respondent could make him liable for future privacy missteps -- and give the FTC leverage if it should seek to remove Mr. Zuckerberg from the company's management in the future.

But Facebook representatives have made it clear the company wouldn't accept naming Mr. Zuckerberg as a respondent as part of a settlement, according to people familiar with the matter.

The two sides also have discussed alternatives that would make significant changes to Facebook's governance, to put more emphasis on protecting user privacy. For example, Mr. Zuckerberg himself could become Facebook's privacy compliance officer, under one solution that has been discussed.

If a settlement can't be reached, the commission could eventually choose to sue Facebook over the violations. However, that presents risks for all sides.

Mr. Simons and the FTC likely would lose a measure of control over the case, because it would be handled by Justice Department lawyers who might have their own ideas about how to pursue it and what remedies to seek. The FTC would also run the risk that the litigation likely wouldn't produce the record penalty and other far-reaching remedies that a settlement likely would. The FTC could even lose.

As for Facebook, it would confront the risk of more embarrassing material about its past privacy practices becoming public. The case also could drag on for years, becoming a cloud over its brand.

The FTC's disagreements over the Facebook settlement could be a sign of things to come in Congress, where sweeping privacy legislation also has been slowed by partisan sparring over a range of issues. Those include whether a new federal law should override state laws -- and how tough the federal law should be.

Republicans appear eager to pass privacy legislation in the current Congress, and the GOP-led Senate Commerce Committee has been working on bipartisan legislation, while the Judiciary Committee also has showed interest in the topic.

Democrats, who control the House, have been slower to begin discussions, although the pace of debate recently has appeared to speed up.

Write to John D. McKinnon at john.mckinnon@wsj.com

(END) Dow Jones Newswires

May 24, 2019 16:33 ET (20:33 GMT)

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