On Friday the Federal Trade Commission (FTC) approved a $5bn fine for social media giant Facebook to settle data privacy breaches that were uncovered during the investigation that followed the Cambridge Analytica controversy.
This is hugely significant for U.S. companies as it comes following a report during May that approximately 50% of companies are not prepared for the January 1 2020 introduction of the California Consumer Privacy Act (CCPA). It shows that public bodies, and elected representatives, are willing to apply serious financial sanctions to all companies that are not in compliance with the relevant data protection legislation.
The Wall Street Journal reported that the FTC voted 3 to 2, following party lines, to approve the settlement. However, there still needs to be a final seal of approval given from the Department of Justice (DOJ).
Despite the extent of the fine, it it the largest ever levied by the FTC, there has been criticism that it is not high enough. This is due to the fact that Facebook’s global revenue for the first three months of 2019 was $15bn. Among elected representatives there has been a mixture of criticism and calls for more Federal legislation, like the CCPA, to properly police the management of private data.
Using his Twitter account, David Cicilline, the Democratic congressman who chairs the House subcommittee on antitrust issues, commented: “The FTC just gave Facebook a Christmas present five months early. It’s very disappointing that such an enormously powerful company that engaged in such serious misconduct is getting a slap on the wrist.”
In addition to this Democrat Senator Ron Wyden of Oregon said the fine shows just how great the task is when it comes to holding massive global companies accountable for the mismanagement of private data.
He said: “This reported fine is a mosquito bite to a corporation the size of Facebook. And I fear it will let Facebook off the hook for more recent abuses of Americans’ data that may not have been factored in to this inadequate settlement. The only way to assure Americans that our private data will be protected is to pass a strong privacy bill, like the one I plan to introduce in the coming weeks.”
This settlement solves a massive regulatory issue for Facebook. However, the social media giant is also set to encounter further potential antitrust probes as the FTC and the US justice department begin a thorough review of competition among the biggest US technological companies. This may lead to the introduction of more data privacy legislation like the CCPA.
Senator Mark R Warner of Virginia said: “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.”
Cambridge Analytica & Facebook Data Breaches
Cambridge Analytica was a British political consulting firm that had unauthorized access to the data of millions of Facebook users. The data was gathered using an online quiz app to ascertain a personality type. This was just one of a number of problems Facebook has encountered in relation to data privacy in the past 18 months.
- Facebook Hit with UK£500k Fine for Pre-GDPR Data Breach
- Facebook Reveals Huge Drop in Active Users Following Introduction of GDPR
- Tech Giants including Facebook and Google Subject to GDPR Complaints
- First GDPR Lawsuit: $8.2 billion Fines Claimed from Facebook and Google
- Facebook Moves Quickly to Address Privacy Error
Despite the fine, Facebook’s stock price jumped more than 1% when the news first broke last Friday, the stock’s highest price in the past 12 months. Robert Weissman, the president of Public Citizen, a consumer interest group, said in a statement: “It’s a bad sign that markets are reacting to Facebook’s settlement with the F.T.C. by jumping the value of the company’s stock.”
The onus is now on all companies, big and small, to ensure that they are compliant with all relevant data protection legislation in order to avoid being sanctioned with massive financial penalties by the FTC.