Facebook will be asked to fork out $5bn in a settlement with America's trade watchdog, the FTC, following last year's Cambridge Analytica fiasco, it was reported Friday.
The proposed deal will end an FTC probe into whether the antisocial network broke a 2012-era pledge to better protect its addicts' privacy. In 2018, Facebook was accused of running roughshod over that pact by allowing Cambridge Analytica to surreptitiously harvest the personal information of millions of people.
The multi-billion-dollar settlement draft, details of which appeared in the US mainstream media this afternoon ahead of any official word from the FTC or Facebook, will be the watchdog's largest in its history. The figure is set to dwarf the previous high of $22.5m levied against Google in 2012 for forcing tracking cookies into Safari.
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If you think this proposed payout is problematic for Facebook, think again.
If the reports of the deal are true, and if the settlement is accepted by both sides and approved, Facebook will have to cough up $5bn, which is at the upper end of what the Silicon Valley web giant was expecting. In its latest financial report, Zuck & Co set aside $3bn in anticipation of an FTC smack-down, leaving the biz with $2.43bn in profit off $15bn of revenues from the first three months of the year. It warned investors it may have to dole out as much as $5bn.
So, that $5bn is one month of sales, about two months of net income, or less than one per cent of its $585bn market cap.
What's more is that, according to the reports, Facebook won't have to change or limit any of its practices on data collecting and sharing as part of this settlement. It just has to submit to some more oversight, and pinkie-swear it won't break that 2012 agreement to protect people's privacy and allow them to opt into any tweaks to the platform.
No wonder Facebook's share price is actually up right now to $205.28 apiece. Wall Street is seemingly relieved. The corporation has already made back the proposed billions after earlier making the market aware of the upcoming hit.
The FTC's five commissioners were split along party lines in green-lighting the deal, with the two Democrats reportedly pushing for not only a huge fine but some form of tough regulation to stop the same thing happening again and again and again. The Republican side were all in favor of the reported proposed deal.
“Despite Republicans’ promises to hold big tech accountable, the FTC appears to have failed miserably at its best opportunity to do so,” thundered Senator Ron Wyden (D-OR) in a message to The Register. "No level of corporate fine can replace the necessity to hold Mark Zuckerberg personally responsible for the flagrant, repeated violations of Americans' privacy.
“That 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.”
Wyden will, we're told, introduce a Consumer Data Protection Act [PDF] in the coming weeks to safeguard the online privacy of American citizens, and impose serious penalties, including fines of up to four per cent of revenues and threaten senior executives with jail time, if web giants play fast and loose with their customers' personal data.
The proposed deal will now have to be approved by the US Department of Justice before it can go any further. Neither the FTC or Facebook had any comment to share at this time. ®