Facebook to pay record $5 billion U.S. fine over privacy violations but critics call it a bargain

Facebook Inc will pay a record-breaking $5 billion fine to resolve a government probe into its privacy practices and the social media giant will restructure its approach to privacy, the U.S. Federal Trade Commission said on Wednesday.

The FTC voted 3-2 along party lines

to adopt the settlement, which requires court approval, even as Democrats said the settlement did not go far enough or require a large enough fine.

“Despite repeated promises to its billions of users worldwide that they could control how personal information is shared Facebook undermined consumers’ choices,” said FTC Chairman Joe Simons, a Republican, in a statement.

But Democratic FTC Commissioner Rohit Chopra said the penalty provided “blanket immunity” for Facebook executives “and no real restraints on Facebook’s business model” and does “not fix the core problems that led to these violations.”

Facebook declined to comment ahead of the settlement’s public release.

The FTC said that Facebook’s data policy was deceptive to “tens of millions” of people who used Facebook’s facial recognition tool and also violated its rules against deceptive practices when it did not disclose phone numbers collected to enable a security feature would be used for advertising.

Under the settlement, Facebook’s board will create an independent privacy committee that removes “unfettered control by Facebook CEO Mark Zuckerberg over decisions affecting user privacy.”

Facebook also agreed to exercise greater oversight over third-party apps.

Chopra and Democratic FTC Commissioner Rebecca Slaughter, who opposed the settlement, said the $5 billion penalty may be less than Facebook’s gains from violating users’ privacy.

“Until we address Facebook’s core financial incentives for risking our personal privacy and national security, we will not be able to prevent these problems from happening again,” Chopra said.

The FTC Republican majority argued the settlement “significantly diminishes Mr. Zuckerberg’s power — something no government agency, anywhere in the world, has thus far accomplished.”

The Republican commissioners led by Simons said if the FTC had gone to court “it is highly unlikely that any judge would have imposed a civil penalty even remotely close to this one.”

They called the settlement — in light of what the FTC might have been able to win in a court fight — “a complete home run.”

The Republican majority noted that Zuckerberg and other company executives will have to sign quarterly certifications attesting to the company’s privacy practices.

The FTC said Zuckerberg or others filing a false certification could face civil and criminal penalties.

Facebook also is barred from asking for email passwords to other services when consumers sign up.

Facebook is barred from using telephone numbers obtained in a security feature, like two-factor authentication, for advertising and must get user consent if it plans to use data from facial recognition technology.

• Reuters