Facebook Privacy Settlement Delayed by FTC Split--3rd Update
May 24 2019 - 4:48PM
Dow Jones News
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)
Copyright (c) 2019 Dow Jones & Company, Inc.
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