Facebook to Create Privacy Panel, Pays $5bn for Allegations Settlement

Mark Zuckerberg

The Federal Trade Commission was Thursday expected to announce that Facebook Inc. had agreed to a sweeping settlement of significant allegations it mishandled user privacy and pay $5 billion, two people briefed on the matter said.

According to Reuters, as part of the settlement, Facebook would agree to create a board committee on privacy and would agree to new executive certifications that users’ privacy is being properly protected, the people said.

Facebook Chief Executive Mark Zuckerberg, would have to certify every three months that the company is properly safeguarding user privacy, a person briefed on the matter said.

The Washington Post had reported that the FTC would allege Facebook misled users about its handling of their phone numbers and its use of two-factor authentication as part of a wide-ranging complaint that accompanies a settlement ending the government’s privacy probe, citing two people familiar with the matter.

Separately, the US Securities and Exchange Commission was expected to announce a related settlement with Facebook for around $100 million over allegations it failed to disclose risks to investors over its privacy practices. The Wall Street Journal reported the SEC settlement earlier.

The Post had also reported the FTC also plans to allege Facebook provided insufficient information to about 30 million users about a facial recognition tool, an issue identified earlier by Consumer Reports. The settlement comes amid growing concern among US policymakers about the privacy of online users and have sparked calls for new legal protections in Congress.

Separately, the US Justice Department had said late Tuesday, it was launching a broad antitrust probe into the competitive practices of large tech companies like Facebook. Two people briefed on the matter confirmed the Post report the FTC will not require Facebook to admit guilt as part of the settlement. The settlement would need to be approved by a federal judge and would contain other significant allegations of privacy lapses, the people said. The fine would mark the largest civil penalty ever paid to the FTC. The FTC and Facebook declined to comment.

The FTC confirmed in March 2018 it had opened an investigation into allegations Facebook inappropriately shared information belonging to 87 million users with the now-defunct British political consulting firm Cambridge Analytica. The probe has focused on whether the data sharing violated a 2011 consent agreement between Facebook and the regulator and then widened to include other privacy allegations.

A person briefed on the matter said the phone number, facial recognition and two-factor authentication issues were not part of the initial Cambridge Analytica probe. Some in Congress have criticised the reported $5 billion penalty, noting Facebook in 2018 had $55.8 billion in revenue and $22.1 billion in net income.