Facebook is faced with the largest levy ever fined against a tech company.
On Wednesday morning, the Federal Trade Commission formally announced a $5 billion settlement with Facebook as the resolution to the years-long investigation by the regulators into how Facebook lost control over massive amounts of users’ personal data and mismanaged communications with users, especially in the Cambridge Analytica data scandal.
The Cambridge Analytica scandal is a major political scandal that occurred early last year, where Cambridge Analytica’s illicit harvesting of the personal data of millions of Facebook users’ profiles was revealed. This was done without the consent of the users, and was subsequently used for political advertising purposes.
In the agreement filed on Wednesday, the FTC claims that Facebook violated the law when it failed to protect personal data from third parties, lying to its users about a default mishap on its facial recognition software, and illegally serving ads by using the phone numbers provided for security.
As this occurs at a time when Washington is earnestly calling for better accountability and transparency by tech companies, the deal checks on Facebook’s privacy culture. According to the FTC chairman, Joseph Simmons, “the relief is designed not only to punish future violations but, more importantly, to change Facebook’s entire privacy culture to decrease the likelihood of continued violations”
Facebook is now required to conduct a privacy review of every service or product that it develops, and these reviews must compulsorily be submitted to not only the CEO, but also a third-party assessor every quarter.
The facial recognition software of Facebook also comes under fire in this deal. The new rules require the company to obtain affirmative consent before creating new facial recognition models, though, the company is not required to destroy the old models that might have been created without consent.
A Facebook post was published on Wednesday, shortly after the FTC announcement. Mark Zuckerberg, the company’s CEO said,
We’ve agreed to pay a historic fine, but even more important, we’re going to make some major structural changes to how we build products and run this company. We have a responsibility to protect people’s privacy. We already work hard to live up to this responsibility, but now we’re going to set a completely new standard for our industry.
The FTC settlement also covers Instagram and WhatsApp, subsidiaries of Facebook, thus, potentially setting the tone for more action by policy makers worldwide as they protect personal data.