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FTC Hits Facebook With A $5 Billion Fine, Imposes New Privacy Requirements

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WASHINGTON (CelebrityAccess) — On Wednesday, the Federal Trade Commission announced that social media giant Facebook will pay a record-breaking $5 billion penalty, and submit to sweeping new privacy regulations and a modified corporate structure in the wake of allegations of deceptive business practices and widespread privacy abuses of its users.

The monetary penalties for Facebook are the largest ever imposed on a company for violating consumers’ privacy and almost 20 times greater than the largest privacy or data security penalty ever imposed worldwide. It is one of the largest penalties ever assessed by the U.S. government for any violation, the FTC said.

However, while the $5 billion figure is eye-popping, context is important and the fine represents less than a third of Facebook’s Q2 2019 revenue of $16 billion.

The settlement order also imposes new restrictions Facebook’s business operations and creates multiple channels of compliance and will seek to force Facebook to provide its customers with stronger privacy controls and make the company’s executives accountable for lapses.

The order also requires that Facebook establishes an independent privacy committee of Facebook’s board of directors, removing direct control over decisions affecting user privacy from Facebook’s CEO Mark Zuckerberg.

Members of the privacy committee must be independent and will be appointed by an independent nominating committee. Members can only be fired by a supermajority of the Facebook board of directors.

“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices,” said FTC Chairman Joe Simons. “The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC. 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. The Commission takes consumer privacy seriously, and will enforce FTC orders to the fullest extent of the law.”

The settlement order follows a yearlong investigation by the FTC, in which the commission alleged that Facebook repeatedly used deceptive disclosures and settings to undermine users’ privacy preferences in violation of its 2012 FTC order.

These tactics allowed the company to share users’ personal information with third-party apps that were downloaded by the user’s Facebook “friends.” The FTC alleges that many users were unaware that Facebook was sharing such information, and therefore did not take the steps needed to opt-out of sharing.

In addition, the FTC alleges that Facebook took inadequate steps to deal with apps that it knew were violating its platform policies.

In a statement, Facebook welcomed the new changes, pledging full and transparent cooperation.

“The agreement will require a fundamental shift in the way we approach our work and it will place additional responsibility on people building our products at every level of the company. It will mark a sharper turn toward privacy, on a different scale than anything we’ve done in the past,” Facebook said in a statement Wednesday.

“The accountability required by this agreement surpasses current US law and we hope will be a model for the industry. It introduces more stringent processes to identify privacy risks, more documentation of those risks, and more sweeping measures to ensure that we meet these new requirements. Going forward, our approach to privacy controls will parallel our approach to financial controls, with a rigorous design process and individual certifications intended to ensure that our controls are working — and that we find and fix them when they are not.”

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