Facebook's frankly awful management of user data over recent years has finally been punished. The Federal Trade Commission (FTC) officially announced a record $5 billion fine for the company regarding its privacy violations.
An unprecedented punishment for several reasons, it is also the largest fine the FTC has ever handed out. Furthermore, Facebook will now be forced to adhere to new restrictions and change its corporate structure to make executives directly accountable for privacy decisions.
Among the issues Facebook has been involved in in recent years include the Cambridge Analytica scandal which showed Facebook user data was used to influence political elections. The social network was also found to be scraping data from Android users. In another embarrassing twist, Facebook this year admitted its AI is not powerful enough to stop extreme content streaming through its Live feature.
Specifically, regarding its flaunting of privacy laws, the FTC took a dim view:
“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers' choices,” said FTC Chairman Joe Simons in the press release. “The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC. The relief is designed not only to punish future violations but, more importantly, to change Facebook's entire privacy culture to decrease the likelihood of continued violations. The Commission takes consumer privacy seriously and will enforce FTC orders to the fullest extent of the law.”
$5 billion represents a fine 20 times larger than any other privacy settlement globally. FTC points out the second highest settlement in privacy was the Consumer Financial Protection Bureau (CFPB) and States v. Equifax resulting in a $275 million payout.
Of course, $5 billion is not the kind of sum that will endanger Facebook or even really be noticed. The company gathered $55 billion in revenue during 2018. Still, the FTC says the penalty sends a message:
“This settlement's historic penalty and compliance terms will benefit American consumers, and the Department expects Facebook to treat its privacy obligations with the utmost seriousness,” said Assistant Attorney General Jody Hunt for the Department of Justice's Civil Division in the FTC's press release.
It's not just about the fine, with FTC also placing stricter requirements upon Facebook. Among them is the removal of telephone numbers as a method of security and providing users with clear notice when facial recognition technology is to be used. Furthermore, the social network must now create a data security program.
Executives will also face repercussions for privacy decisions after the FTC criticized the ability of Facebook execs to avoid punishment.
All new requirements are also placed on Facebook-owned companies, which means services such as WhatsApp and Instagram.
As for Facebook, CEO Mark Zuckerberg put a semi-positive spin on the settlement. He placed it behind a gateway for “major structural changes” within the company:
“We expect it will take hundreds of engineers and more than a thousand people across our company to do this important work. And we expect it will take longer to build new products following this process going forward,” Zuckerberg said.