FTC Set to Unveil Terms of $5 Billion Facebook Settlement
July 22 2019 - 3:48PM
Dow Jones News
By Ryan Tracy and Emily Glazer
The Federal Trade Commission is expected to announce a
settlement with Facebook Inc. as soon as this week over the
company's privacy practices, according to people familiar with the
matter.
The settlement, which includes a roughly $5 billion fine and
other requirements of Facebook, would end a lengthy probe into
whether the firm kept its promises to protect user data. As part of
the settlement, Facebook plans to form a new board committee
focused on privacy oversight, one of the people said.
The exact timing of the announcement was still being determined,
this person said, but it is expected before the stock market close
on Wednesday, when Facebook is set to report its quarterly
earnings.
A spokeswoman for the FTC declined to comment. Facebook declined
to comment.
The Wall Street Journal reported on July 12 that the FTC had
voted 3-2 in favor of the settlement, with a Republican majority
backing the agreement while Democratic commissioners objected,
sending it on to the Justice Department's civil division for
review.
A privacy-focused committee of Facebook's board would seek to
ensure senior-level scrutiny of the company's efforts. An internal
privacy team is already charged with vetting major new products.
Under a 2011 FTC consent decree, Facebook agreed to continuing
privacy assessments by PricewaterhouseCoopers LLP.
Experts watching the probe say they expect Facebook to agree to
heightened regulatory oversight now that the FTC appears to have
determined the 2011 deal didn't stop the company from further
privacy violations.
"The FTC does not have supervision authority, but there are ways
of creating an analog to that," said David Vladeck, a Georgetown
University law professor and former FTC official.
Observers say the fact that the case is settling before a trial,
with two Democratic commissioners opposing it, suggests the deal
will be less restrictive than some Facebook critics hope. The
Electronic Privacy Information Center, a privacy advocacy group,
has urged the FTC to consider requiring Facebook to curtail
data-collection on non-Facebook users or to unwind previous
acquisitions.
The settlement could help the FTC make the case to lawmakers
that it is toughening enforcement in online privacy. The FTC has
been criticized frequently in recent years as lax in that arena,
with some questioning whether another agency should take over its
responsibilities.
The FTC also is expected to announce a settlement soon with
Alphabet Inc.'s YouTube unit over alleged violations of children's
privacy protections. On Monday, the FTC announced a settlement with
Equifax Inc. of up to $700 million to resolve investigations
related to a 2017 data breach that exposed personal information of
nearly 150 Americans.
The string of settlements coincides with the FTC's pursuit of
additional congressional funding for its privacy and antitrust
enforcement efforts. Many lawmakers have said the agency's funding
levels are insufficient.
The FTC opened its Facebook probe after disclosures that the
owner of a quiz app scraped personal data on tens of millions of
Facebook users and their friends, then shared it with political
consulting firm Cambridge Analytica.
Cambridge Analytica used personal data to help politicians
influence voters. It worked for several Republican campaigns in
2016, including President Trump's. The company said it was shutting
down last year, while facing questions about its tactics, its
handling of personal data and the effectiveness of its
services.
Facebook has acknowledged other missteps following the Cambridge
Analytica disclosures, including a hack of some accounts last
year.
The settlement alone won't end regulatory scrutiny of the tech
giant in the U.S. and abroad. The company faces European probes of
its privacy practices, global scrutiny of its plan to develop a
cryptocurrency and a U.S. congressional antitrust inquiry.
--John D. McKinnon and Jeff Horwitz contributed to this
article.
Write to Ryan Tracy at ryan.tracy@wsj.com and Emily Glazer at
emily.glazer@wsj.com
(END) Dow Jones Newswires
July 22, 2019 15:33 ET (19:33 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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