FTC reaches $5 billion settlement with Facebook

Facebook has reportedly reached a settlement with the Federal Trade Commission (FTC) over data privacy concerns. The Federal Trade Commission approved a $5 billion settlement with Facebook for the company’s 2018 Cambridge Analytica scandal. This fine would represent approximately 9% of Facebook’s 2018 revenue. 

According to the FTC, the personal data protection policy of over 87 million Facebook users were violated by Cambridge Analytica, a British political consultancy firm. The $5 billion fine will be the largest ever imposed by the FTC against a tech company. FTC’s largest fine till date was the one it imposed against Google. Google had agreed to pay $22.5 million in 2012 due to its privacy lapses.

Federal Reserve Chairman Jerome Powell recently said that Facebook’s digital currency called Libra “cannot go forward until serious concerns are addressed. Libra, raises many serious concerns regarding money laundering, privacy, financial stability and consumer protection and I don’t think the project can go forward.”

The FTC had opened a probe last year into the Cambridge Analytica scandal after the social networking giant Facebook admitted that Cambridge Analytica acquired detailed personal information of more than 87 million Facebook users.

This settlement has drawn a lot of criticism from a number of Congress members and senators, including Democratic Senator Mark Warner. “Given Facebook’s repeated privacy violations, it is clear that fundamental structural reforms are required. With the FTC either unable or unwilling to put in place reasonable guardrails to ensure that user privacy and data are protected, it’s time for Congress to act,” Warner said.