The US Federal Trade Commission (FTC) approved a roughly Sh500 billion ($5 billion) settlement with Facebook Inc this week over its investigation into the social media company’s handling of user data, a source familiar with the situation said last week.
The FTC has been investigating 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.
Investors cheered news of the deal and pushed Facebook shares up 1.8 per cent, while several powerful Democratic lawmakers in Washington condemned the proposed penalty as inadequate.
The FTC is expected to include in the settlement other restrictions on how Facebook treats user privacy, according to the Wall Street Journal, which also said that the agency vote was along party lines, with three Republicans voting to approve it and two Democrats opposed.
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The settlement would be the largest civil penalty ever paid to the agency. The FTC and Facebook declined to comment. Representative David Cicilline, a Democrat and chair of a congressional antitrust panel, called the Sh500 billion penalty “a Christmas present five months early.”
“This fine is a fraction of Facebook’s annual revenue. It won’t make them think twice about their responsibility to protect user data,” he said. Facebook’s revenue for the first quarter of this year was Sh1.51 trillion ($15.1 billion) while its net income was Sh243 billion ($2.43 billion).
It would have been higher, but Facebook set aside Sh300 billion for the FTC penalty.
While the deal resolves a major regulatory headache for Facebook, the Silicon Valley firm still faces further potential antitrust probes as the FTC and Justice Department undertake a wide-ranging review of competition among the biggest US tech companies.