U.S. regulators have approved a $5 billion penalty against Facebook to resolve a probe over the social media giant’s privacy, and protection of user data, reports in U.S. media stated on Friday.
The Federal Trade Commission (FTC) has been looking closely into Facebook after personal data of about 87 million users were allegedly harvested and shared inappropriately without their consent and used for political advertising purposes by the British political consultancy group Cambridge Analytica. The investigation probed on whether the alleged information sharing violated the 2011 consent agreement between the regulator and Facebook.
Investors drove Facebook shares up by 1.8% with the news, while most Democratic lawyers based in Washington criticize the proposed fine as inadequate.
According to the Wall Street Journal, FTC is anticipated to incorporate in the deal other limitations concerned about Facebook’s way of handling its users’ privacy. As stated in the report, there were three Republican who approved and two Democrats who opposed the agency vote.
The settlement is set to be the most substantial civil penalty FTC has imposed. When asked for comments, both Facebook and FTC refused to give statements.
According to Democrat and Representative David Cicilline, the $5 billion fine against Facebook is like an early Christmas present. He also added that the penalty is only a fraction of the social media company’s annual revenue.
During the first quarter of 2019, Facebook’s revenue was estimated to be around $15.1 billion, and net income was about $2.43 billion. According to reports, Facebook’s revenue would have reached higher numbers, but they allocated $3 billion to pay for the penalty imposed by FTC.
While the settlement has fixed a significant problem for Facebook, the Silicon Valley firm is facing budding antitrust probes as the Justice Department and FTC is undertaking a comprehensive analysis of competition among tech company giants in the U.S.
Facebook was also criticized by President Donald Trump and other experts about its Libra cryptocurrency over issues about money laundering and privacy.
The missteps with Cambridge Analytica and the negative sentiments over misinformation and hate speech on the social media platform have prompted Facebook co-founder Chris Hughes and Senator Elizabeth Warren to urge the government to make the social media company sell Instagram and WhatsApp, which Facebook bought in 2012 and 2014, respectively.
Amid all these issues, Facebook has proven to be resilient as it surpassed past earnings in the last two quarters.
Early this year, Democrat Senator Richard Blumenthal and Republican Senator Josh Hawley have told FTC that the $5 billion civil fine was too small and that executive officials, including Facebook CEO Mark Zuckerberg, should be greatly accountable.
According to Rohit Chopra, an FTC Commissioner and a Democrat, the agency should make the high officials responsible for the consent decrees violations if proven that they have also engaged in the violations.
The Civil Division of the Justice Department is yet to finalize the settlement, and an official announcement is expected to be released early next week.
An informant who has enough knowledge about the deal told Reuters last May that whatever the result of the agreement would possibly put Facebook under oversight for 20 years.
