Historical Stock Chart
3 Months : From Dec 2019 to Mar 2020
By Ryan Tracy in Washington and Emily Glazer in Los Angeles
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 (January 11, 2020).
Almost six months after Facebook Inc. agreed to a $5 billion settlement of privacy violations, the issue is anything but settled for the social-media giant.
The deal with the Federal Trade Commission announced in July to settle allegations that Facebook broke its promises to protect users' privacy is still under review by a federal judge, who has been weighing objections from opponents who believe the deal is inadequate.
Judge Timothy Kelly of the U.S. District Court for the District of Columbia has ordered Facebook and the government to file by Jan. 24 written responses to privacy advocacy groups critical of the settlement.
The groups' chief complaint is a provision releasing Facebook from liability for past missteps, including any unfair or deceptive actions the FTC was aware of as of June 2019. That provision, they say, could nullify long-held complaints about Facebook that aren't addressed in the proposed settlement, including about its use of facial-recognition technology or its collection of personal health information.
"The proposed release is so vague, and the scope of immunity Facebook would gain is so indeterminately broad, that the Court should reject it as procedurally unfair," Marc Rotenberg, president of the Electronic Privacy Information Center, said in a filing to the court.
Facebook and the FTC have defended the record penalty and related requirements for the company, saying it will reshape how the company considers users' privacy. The settlement is based on charges that Facebook violated a 2012 FTC order by deceiving users about their ability to control their personal information.
James Kohm, director of enforcement in the FTC's consumer protection bureau, said the agency was aware of other privacy complaints about Facebook, and the settlement addresses violations "that we determined were actionable."
He said in an interview that he expects the court to approve the deal.
Facebook said it has been taking the necessary steps to implement the agreement. "We've put dozens of teams in place, made many of the necessary structural and technical changes and expanded privacy protections across our products," said Michel Protti, chief privacy officer of product.
Still, Facebook isn't concerned the deal with the FTC will fall apart, people familiar with the matter said.
Inside the social-media company, senior officials have been putting in an increasing amount of money, people and time to comply with requirements of the FTC deal, the people said.
At a Facebook off-site gathering for senior officials in Hawaii last month, compliance with the FTC settlement was one of the focus areas, some of the people said.
The settlement requires Facebook to restructure its privacy practices from the board of directors down. That includes an independent board privacy committee, mandatory privacy reports to senior leaders and personal certification from Chief Executive Mark Zuckerberg that Facebook is complying with regulatory requirements. The company also must hire an independent assessor that will report to the board's privacy committee. Some aspects legally can't be activated until after the court gives final approval, Facebook said.
There are additionally a number of privacy requirements that have taken longer than expected to implement given the number and complexity of Facebook's databases and servers, the people familiar said.
Company officials in Hawaii also heard updates about other potential headaches, one of the people said, including investigations by state attorneys general. The states are probing, among other things, what Facebook knew about the activities of Cambridge Analytica, a former political consulting firm that used harvested Facebook user data.
Dozens of states in 2018 wrote a joint letter asking Facebook for information about its privacy practices in the wake of reports about Cambridge Analytica. State investigations are continuing, with New York and Pennsylvania among the most aggressive, according to the person.
Facebook said it is cooperating with the probes.
Mr. Zuckerberg, at the time of the settlement announcement, said the new requirements "go beyond anything required under U.S. law today. The reason I support them is that I believe they will reduce the number of mistakes we make and help us deliver stronger privacy protections for everyone."
Facebook has also resisted some states' requests. Attorneys general representing California, Massachusetts and the District of Columbia have each taken Facebook to court demanding access to internal company documents. In California's case, the state is subpoenaing emails from senior executives.
"Now that the court has compelled Facebook to respond I think they will be more diligent in producing information," California Attorney General Xavier Becerra said in an interview last month.
The FTC's investigation unearthed email exchanges appearing to connect Facebook's Mr. Zuckerberg to potentially problematic privacy practices, The Wall Street Journal reported in June. When the FTC announced the settlement in July, it didn't disclose emails from Mr. Zuckerberg or other executives. Facebook at the time said it fully cooperated with the FTC's investigation and provided tens of thousands of documents, emails and files. The company then said Mr. Zuckerberg or others didn't knowingly violate Facebook's obligations under the FTC consent order nor do any emails exist that indicate they did.
Mr. Kohm of the FTC said evidence his agency gathered suggested "this was a company that wasn't paying attention to privacy the way they should, and part of that is reflected in the fact that the CEO wasn't as involved" in privacy decisions.
Others at the FTC have said the agency should have pressed further to investigate the role of senior Facebook executives. FTC Commissioner Rohit Chopra, one of the agency's commissioners who voted against approving the Facebook settlement, last month told a gathering of state attorneys general, "There was a lot more to do, and I think that now the ball really is in your court."
Write to Ryan Tracy at email@example.com and Emily Glazer at firstname.lastname@example.org
(END) Dow Jones Newswires
January 11, 2020 02:47 ET (07:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.