Source: MSN Money
The Federal Trade Commission voted this week to approve a roughly $5 billion settlement with Facebook that could end an investigation
The settlement — adopted with the FTC’s three Republicans supporting it and two Democrats against it — could end a wide-ranging probe into Facebook’s mishandling of users’ personal information that began more than a year ago.
The FTC’s $5 billion punishment against Facebook sets a new record as the largest penalty ever assessed against a tech company that broke a past promise to the government to improve its privacy practices. The matter from here rests in the hands of the Justice Department, which typically must finalize FTC settlements, though DOJ rarely has upended them.
Facebook warned investors earlier this year it could face an FTC fine as high as $5 billion. Wall Street appeared to reward the company for setting aside a large portion of that penalty earlier this year, as the company’s stock rose almost 2 points following news of the settlement Friday.
The FTC declined to comment on the matter. Facebook also declined to comment.
But the FTC’s
Under the FTC’s new settlement, the consequences for Facebook could be vast: The tech giant may have to document every decision it makes about data before offering new products, keep closer watch over third-party apps that tap users’ information, and require its top executives, including Facebook CEO Mark Zuckerberg, to attest that the company adequately has protected privacy. Facebook had agreed to broad contours of those terms as part of confidential settlement talks with the FTC, the Post reported earlier this year.
The new settlement would go far beyond the 2011 agreement Facebook brokered with the FTC. That accord required Facebook to give users greater choice about what happens to their data and inform them more clearly about how their personal information is used. The agreement also required Facebook to submit to 20 years of regular privacy checkups from outside watchdogs, though those reviewers never once flagged a major mishap at the company for the FTC to review.
The Wall Street Journal first reported details of the FTC’s vote.
The decision by the commission’s two Democrats to vote against the settlement could suggest simmering frustrations that the FTC did not go far enough in the fine and other punishments it levied against Facebook to end the probe. But the alternative–if Facebook resisted brokering such a deal–could have forced the two sides to go to court in what could have a been a bruising legal battle over the social-networking giant’s data-collection practices and the government’s ability to regulate them.