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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.
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(END) Dow Jones Newswires
July 22, 2019 15:33 ET (19:33 GMT)
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