FTC fines Facebook $5B, adds oversight for privacy mishaps

Mark Zuckerberg

The chief financial officer, David Wehner, cautioned that he expects revenue growth to decelerate in the second half of 2019 due to "ad targeting headwinds". Facebook stock was down 2.2 per cent in the pre-market trading.

Facebook has been promoting its new privacy-focused posture all year, most recently at its developer conference in April, when Zuckerberg discussed the development of new encryption technology to protect users' messages, photos and videos. They gained 1.1 per cent to US$204.66 at the close in NY, about 5.9 per cent below a record high reached on July 25, 2018.

"In a Facebook post, Zuckerberg said" "we're bringing our privacy controls more in line with our financial controls". "I'm committed to doing this well and delivering the best private social platform for our community", he added.

Despite Facebook's transgressions on user privacy, the company's revenues keep rising. The U.S. Department of Justice has opened an inquiry into possible antitrust violations by Facebook and other large tech companies. It reported 2.4 billion monthly active users during the quarter and 1.59 billion daily active users, both of which are 8 percent higher than a year ago.

FTC Chairman Joe Simons said the settlement is "unprecedented in the history of the FTC" and is designed "to change Facebook's entire privacy culture to decrease the likelihood of continued violations".

"In particular, we have agreed to implement a comprehensive expansion of our privacy programme, including substantial management and board of directors oversight, stringent operational requirements and reporting obligations, and a process to regularly certify our compliance with the privacy programme to the FTC", the social media giant said.

To encourage users to share information on its platform, Facebook promises users they can control the privacy of their information through Facebook's privacy settings.

Facebook has faced questions for the past three years from regulators and users worldwide over how services created to share news and events with friends and family have become platforms for spreading misinformation about politics and health. 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. "The order requires a fundamental shift in the way we work".

While you might be thinking that you've heard this all before, Facebook says that it will be watched closely by both the FTC and the DOJ.

Meanwhile, the Securities and Exchange Commission of the United States has said it also intends to levy its own charges against Facebook for making misleading disclosures about the risk of misuse of user data.

The FTC started investigating Facebook in March 2018 after reports that U.K political consulting firm Cambridge Analytica had accessed the data of around 87 million Facebook users. After a years-long investigation into various privacy breaches culminating with the Cambridge Analytica scandal last year, the Commission has reached a conclusion that is likely to prove just as controversial.

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