FTC hits Facebook with a $ 5 billion fine and new privacy controls

The Federal Trade Commission formally announced a $ 5 billion settlement with Facebook on Wednesday morning, the result of years of investigations into the Cambridge Analytica scandal and other privacy violations.

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In the agreement submitted today, the FTC claims that Facebook has violated the law by failing to protect against third-party data, displaying ads by using phone numbers for security, and lying to users that the face recognition software is disabled by default. To pay those costs, Facebook will pay $ 5 billion – the second largest fine ever imposed by the FTC – and agree to a series of new restrictions on its activities.

Apart from the fine of millions of dollars, Facebook will be required to conduct a privacy survey of every new product or service that it develops, and these assessments must be submitted quarterly to the CEO and an external reviewer. Because it is directly related to Cambridge Analytica, Facebook will now be required to obtain purposes and use certifications from apps and external developers who want to use Facebook user data. However, there are no limits to what data access the company can authorize to those groups once the disclosure is made.

"The Order imposes a privacy regime that includes a new corporate governance structure, with corporate and individual accountability and stricter monitoring of compliance," the FTC majority commissioners wrote in a statement. “This approach significantly increases the chance that Facebook will comply with the Order; if there are abnormalities, they are likely to be discovered and corrected quickly. "

Facebook & # 39; s face recognition software is also under fire from the settlement. Under the new rules, the company must be given affirmative permission to create new face recognition models, although it is not necessary to destroy old models made without such permission.

According to reporting by The Washington Post, the FTC agreed to approve the $ 5 billion fine along party lines, with Democratic minority members rejecting the settlement as insufficient. Democratic Commissioners were particularly concerned that Mark Zuckerberg and other high-level executives were exempt from any personal liability for the violations, the Post found it. But the agency refrained from pursuing even larger penalties such as a considerably higher fine and finding CEO Mark Zuckerberg personally liable.

Commissioners met Monday with members of Congress to explain the details of the settlement, which reportedly experienced some disappointment from Congress technical critics. According to Bloomberg Law, Senator Richard Blumenthal (D-CT) called the deal an & # 39;pin prick. "In response to the Post reporting, House antitrust leader Rep. David Cicilline (D-RI) called it a "blow on the pulse" for a company with $ 55 billion in annual sales.

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These complaints have given an impulse to the impetus to expand the legal powers of the FTC. After announcing a $ 700 million settlement with Equifax earlier this week, FTC Chairman Joe Simons pleaded with Congress to authorize the agency with a new civilian criminal prosecutor. In this case, the Consumer Finance Protection Bureau, which rarely seeks civil fines, was able to throw the multi-million dollar penalty on the company.

"Fortunately, other agencies were able to fill the gap – this time" Said Simons. "But under different circumstances, future violations cannot always be subject to civil fines, which definitely gives the wrong signal with regard to deterrence."

The development of …

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