Facebook's reported settlement with FTC spurs dissent and criticism

16 July 2019 9:04pm
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15 July 2019. By Dave Perera.

Facebook agreed to pay out $5 billion to settle a privacy investigation with the US Federal Trade Commission, multiple press outlets reported this afternoon, an outcome dividing commissioners yet again along party lines.

The Wall Street Journal reported agency commissioners authorized the settlement in a vote this week, with the three Republicans voting to approve and two Democrats dissenting. Any settlement approved by the commissioners undergoes routine review by the Department of Justice, which typically doesn’t change the outcome.

Details are scarce, since neither the FTC nor Facebook are commenting.

Recent decisions at the FTC show a divide between Democrats and Republicans when it comes to holding top company executives accountable. “FTC investigations typically focus on individual accountability only in certain circumstances — and the effect has been that individuals at large companies have often avoided scrutiny,” Commissioners Rohit Chopra and Rebecca Slaughter said in a February dissent to the agency’s $5.7 million settlement with TikTok.

The FTC should move away from that approach, they said, hinting at future dissents. “As we continue to pursue violations of law, we should prioritize uncovering the role of corporate officers and directors and hold accountable everyone who broke the law” they wrote.

The roughly $5 billion fine would be the largest ever levied by a federal agency on a technology company, a fact unlikely to placate agency critics in Congress and elsewhere, unless it comes bundled with tougher privacy restrictions or other measures.

Initial reaction from Democratic senators this afternoon has been largely negative. "This reported $5 billion penalty is barely a tap on the wrist, not even a slap," said Senator Richard Blumenthal, a Connecticut Democrat long critical of the FTC. "Will Facebook be compelled to alter its present, systematic abuse of privacy? Based on the reported settlement, the answer is sadly, no." He called for congressional hearings.

"This reported fine is a mosquito bite to a corporation the size of Facebook," said Senator Ron Wyden, a Oregon Democrat active on privacy issues. "And I fear it will let Facebook off the hook for more recent abuses of Americans' data that may not have been factored in to this inadequate settlement," he said, vowing to introduce privacy legislation in the coming weeks.

Within the civil liberties community, reaction was similarly negative.

“We don’t yet know key aspects of the settlement: whether Facebook must make any changes to its business model or practices as a result of the settlement. By itself, this fine will not be sufficient to change Facebook’s behavior,” said Charlotte Slaiman, competition policy counsel at Public Knowledge.

“FTC settlement with FB is out. The terms are strict. The Chair of the FTC gets on all fours so Mark Zuckerberg can sit down on a human bench. Zuck then gets a bib and eats ribs, wiping his hands on the two other commissioners who must act as human napkins,” tweeted Matt Stoller, a fellow at the Open Markets Institute.

Facebook publicly prepared for the fine by telling investors during a April quarterly earnings call it expected the FTC to exact somewhere between a $3 billion and $5 billon fine.

Traders today reacted favorably to the settlement news, raising the Menlo Park, California, company’s shares after reports on the matter were published near the close of trading.

"It’s a bad sign that markets are reacting to Facebook’s settlement with the FTC by jumping the value of the company’s stock. It appears that Facebook got off easy yet again," said Robert Weissman, president of Public Citizen, in a statement.