Whopping $5 billion FTC settlement still a plan on Facebook, critics state

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The response was quick, loud and foreseeable: Facebook left light. After months of accumulation, the $5 billion settlement in between the social media and the Federal Trade Commission was anticlimactic for practically everybody, a frustrating outcome that handled to join Democrats, Republicans, customer supporters and personal privacy hardliners. 

The settlement does little to require modifications in Facebook’s core service design, which counts on utilizing the individual information you voluntarily offer it to provide targeted advertisements. It does little to penalize the business for stopping working to reveal how it will utilize the information it gathers. It does not hold executives, consisting of CEO Mark Zuckerberg and COO Sheryl Sandberg, personally accountable for the issues that turned up on their watch.

Instead, the settlement mandates the development of a committee of Facebook’s board to examine personal privacy choices and a brand-new personal privacy program. It likewise needs Zuckerberg to personally license that the program adheres to a legal arrangement Facebook has with the FTC to secure user personal privacy. The $5 billion fine is the biggest charge ever imposed versus a business for customer personal privacy offenses, the FTC stated. The FTC voted 3-2 along celebration lines to authorize the settlement, which still requires to be cleared by a court. 

To Facebook’s critics, the offer was a costly Get Out of Jail Free card. 

“This settlement does nothing to change Facebook’s creepy surveillance of its own users & the misuse of user data,” tweeted Sen. Josh Hawley, a Republican from Missouri. “It utterly fails to penalize Facebook in any effective way.”

Democrats were simply as fast to slam the arrangement, stating it totaled up to a token charge that will not do anything to alter the social media’s operating treatments. “A $5 billion fine may appear large, but it amounts to a slap on the wrist in comparison to the revenue that Facebook rakes in,” Sen. Edward Markey, a Massachusetts Democrat, stated in a declaration. “This settlement is also notably deficient in its lack of new safeguards that would effectively prohibit similar privacy violations in the future.”

The actions, along with the settlement itself, should not come as a surprise. The broad strokes of the ultimate arrangement — a $5 billion fine and a handful of conditions, consisting of one that will need CEO Mark Zuckerberg to offer his word the business is securing personal privacy — have actually appeared for months. 

For more than a year, the FTC had actually been examining whether Facebook’s failure to avoid Cambridge Analytica, a now-defunct consultancy that dealt with President Donald Trump’s project, from collecting information on as lots of as 87 million users was an offense of an earlier arrangement to secure user personal privacy. Dribs and drabs of the conversations dripped out, preparing everybody for the ultimate offer. In April, Facebook all however informed financiers what the offer would be, stating throughout its first-quarter profits it had actually reserved as much as $5 billion associated to the FTC examination. Shares increased on relief that it was so little.

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No doubt, $5 billion is a lot of money for most of us. And it’s more than 200 times the $22.5 million Google paid in a 2012 FTC settlement over tracking users that set the previous record for a tech company. But at Facebook, which raked in $56 billion in revenue last year, the fine will barely be felt. 

In fact, it may be the best $5 billion Facebook ever spent.

Ashkan Soltani, former chief technologist at the FTC, noted in a tweet that the settlement covers Facebook violations outside of the Cambridge Analytica scandal. Those include using telephone numbers — gathered ostensibly for use in two-factor authentication — to serve ads, storing passwords in plain text and harvesting email contacts. The settlement also indemnifies Facebook for “any and all claims prior to June 12, 2019,” though that applies only to issues the FTC is currently aware of.

The FTC said the settlement would achieve some of the goals that critics had identified. “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,” said FTC Chairman Joe Simons in a statement. Zuckerberg argued that it will also take Facebook longer to build products.

None of that mollified critics.

“In exchange for modest changes to Facebook’s internal structure, the settlement shields the company from responsibility for violations that may not even be known,” Neema Singh Guliani, senior legislative counsel at the American Civil Liberties Union, said in a statement. “It fails to put strong and meaningful limits on how Facebook collects, uses, and processes user data.”

Wanted: Better consumer protection

The FTC, of course, may have done the best it could with the tools it has. The agency enforces the law, but Congress makes the law. And Congress hasn’t pursued privacy legislation that would protect Americas in the same way that the EU can protect Europeans with the year-old GDPR privacy regulation. 

This wasn’t lost on many critics. Consumer Reports, an independent nonprofit, said the FTC wasn’t getting the support it needed from legislators.

Consumer Reports welcomed the action from the FTC after a year-long investigation, but said it’s clear that Congress needs to give the FTC greater authority and resources to rein in companies like Facebook.  

“With a weak and under-resourced FTC, and a glaring need for far more comprehensive privacy laws, Congress must raise the standards for consumers and hold Big Tech accountable,” Marta Tellado, president and CEO of Consumer Reports, said in a statement. “Lawmakers have a responsibility to pass laws that offer real protections, giving consumers control of their data and the FTC the power it needs to rein in Big Tech.”

On Tuesday, the Department of Justice said it was opening an antitrust review of online platforms and whether they’re reducing competition. The department didn’t name specific companies, but The Wall Street Journal reported that it’s targeting tech giants including Apple, Alphabet, Amazon and Facebook.

Free Press, a nonpartisan group that fights for people’s rights to connect and communicate, said the settlement fell “far too short,” but used it to call for legislation that would prevent such abuses in the future.

“Without corrective action, the business of behavioral advertising is bound to harm our social, political and private lives again and again,” Gaurav Laroia, a lawyer at the group, wrote. “It’s now up to Congress to pass legislation to protect our privacy, our democracy and our civil rights.”

Originally published July 24, 12:05 p.m. PT
Update, 12:47 p.m.: Adds Consumer Reports comments. Update, 9:15 p.m.: Adds ACLU comment.