Zuckerberg Is Required To Certify Compliance -- WSJ

Date : 07/24/2019 @ 8:02AM
Source : Dow Jones News
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Zuckerberg Is Required To Certify Compliance -- WSJ

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By Ryan Tracy and John D. McKinnon 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 24, 2019).

WASHINGTON -- Facebook Inc. CEO Mark Zuckerberg will have to personally certify that the company is taking steps to protect consumer privacy under a settlement expected to be announced with the Federal Trade Commission on Wednesday, a person familiar with the matter said.

The deal includes a requirement that Mr. Zuckerberg make the certification to the FTC quarterly based on his personal knowledge, the person said. A false statement in such a certification would be subject to potential penalties, this person said.

Another person familiar with the matter said Mr. Zuckerberg will have to certify that Facebook has privacy controls in place.

The Wall Street Journal has previously reported that the settlement includes a roughly $5 billion fine for Facebook and other requirements around how Facebook treats users' privacy.

Facebook doesn't admit or deny guilt for previous privacy missteps as part of the deal, according to people familiar with the matter.

The settlement will conclude an FTC probe into whether Facebook violated the terms of a previous FTC order, announced in 2011, in which the company promised to protect consumers' information and be transparent about how it uses personal data.

A number of missteps in recent years have raised questions about Facebook's compliance with the previous settlement, most notably the disclosure last year that tens of millions of Facebook users' data had made its way into the hands of Cambridge Analytica, a political consulting firm that worked for President Trump's campaign.

The treatment of Mr. Zuckerberg has been a crucial issue for both the FTC and Facebook during negotiations, and the outcome could be viewed as a win by both sides. Facebook avoids liability for Mr. Zuckerberg based on previous alleged misdeeds, and avoids a lengthy trial were the case to end up in court.

Mr. Zuckerberg wasn't personally interviewed by the FTC as part of its probe, a person familiar with the matter said.

For the FTC, particularly the agency's Republican leadership, the forward-looking requirements on Mr. Zuckerberg represent a way to show it is holding the powerful CEO personally accountable.

As some details of the deal were divulged in recent weeks, the FTC has faced criticism largely focused on the fact that a monetary fine, however large, wouldn't be enough to deter the profitable social media giant from future privacy violations.

The settlement was approved recently by the FTC's five-member board by a 3-2 vote, people familiar with the matter have said, with three Republicans voting in favor and two Democrats dissenting.

The company is also expected to create a new board committee focused on privacy, to help bolster senior-level scrutiny of the issue at the firm.

Even with the provisions regarding Mr. Zuckerberg, the deal may not satisfy Facebook's loudest critics, who are urging regulators to take more intrusive steps such as curtailing Facebook's data collection or breaking up the company.

While Facebook has become the chief target for critics, other big companies also have been drawn into the privacy crossfire.

Just this week, the FTC took action against Equifax Inc. over a massive data breach affecting tens of millions of Americans. The agency's settlement extracted a civil penalty of up to $700 million from the company.

The FTC is expected soon to settle another high-profile case against Alphabet Inc. unit YouTube over alleged violations of children's online privacy rights.

Taken together, the recent cases suggest that the agency plans to strengthen its much-maligned enforcement efforts in online privacy cases, in hopes of staving off critics who have called for a new federal privacy agency.

Federal antitrust enforcement agencies including the FTC and the Justice Department also have begun preparing for antitrust investigations involving big tech. Lawmakers and some presidential candidates also appear increasingly interested in taking aggressive new tacks on potential antitrust violations by the big tech firms.

The FTC's Facebook settlement -- which already has been widely panned by privacy advocates -- could further fuel the calls for greater antitrust scrutiny of big tech.

Already, the Electronic Privacy Information Center, an advocacy group whose earlier complaints helped lead to a 2011 FTC privacy enforcement order against Facebook, has said the FTC should break up the company by forcing it to unwind its acquisitions of Instagram and WhatsApp.

Write to Ryan Tracy at ryan.tracy@wsj.com and John D. McKinnon at john.mckinnon@wsj.com

 

(END) Dow Jones Newswires

July 24, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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