FTC Imposes Record $5 Billion Penalty on Facebook for Privacy Violations
The Federal Trade Commission fines Facebook $5 billion over the Cambridge Analytica data scandal and mandates the creation of an independent privacy oversight committee. The penalty represents the largest ever issued by the FTC but amounts to less than a tenth of the social network's annual revenue.
The Federal Trade Commission hits Facebook with a record $5 billion fine over the company's role in allowing Cambridge Analytica to harvest data from up to 87 million users without their consent. FTC chairman Joe Simons states that Facebook betrays user trust and deceives the public about controlling personal information, noting that this enormous penalty resets the baseline for future privacy cases.
Despite setting a new record as the largest privacy-related fine in FTC history, the $5 billion penalty makes only a small dent in Facebook's finances because it represents less than a tenth of the tech giant's $56 billion yearly revenue. Separately, Facebook pays a $100 million fine to the Securities and Exchange Commission to settle allegations that it fails to properly disclose the data mishandling to investors.
As part of the settlement, Facebook faces new structural requirements that include forming an independent privacy committee of directors who can only be removed by a supermajority of the board. Additionally, CEO Mark Zuckerberg must personally attest each quarter that the company complies with the new privacy standards, while the settlement explicitly indemnifies Facebook for possible wrongdoing prior to June 12 without requiring an admission of guilt.