The Federal Trade Commission formally announced its $5 billion settlement with Facebook, which is the culmination of a years-long investigation into the Cambridge Analytica scandal and other privacy breaches.
The FTC alleges that Facebook violated the law by failing to protect data from third parties, serving ads through the use of phone numbers provided for security, and lying to users that its facial recognition software was turned off by default. In order to settle those charges, Facebook will pay $5 billion the second-largest fine ever levied by the FTC and agree to a series of new restrictions on its business.
Aside from the $5 billion fine, Facebook will be required to conduct a privacy review of every new product or service that it develops, and these reviews must be submitted to the CEO and a third-party assessor every quarter. As it directly relates to Cambridge Analytica, Facebook will now be required to obtain purpose and use certifications from apps and third-party developers that want to use Facebook user data. However, there are no limits on what data access the company can authorize to those groups once the disclosure is made.
Hitting Facebook with this $5 billion settlement dwarfs the previous record penalty as Google paid $22.5 million to the FTC in 2012. Another wild way to look at this number, the $5B penalty is five times what Facebook paid to purchase Instagram seven years ago.
While the FTC probe was opened after the Cambridge Analytica scandal broke, Facebook had more privacy gaffes over the last year that affected millions of users.
While there were murmurs as far back as January of the FTC planning on making the number a record-setting fine for this settlement, Facebook only set aside $3 billion for the fine ahead of time, according to the WSJ.
In addition to the $5 billion, the settlement is expected to include privacy restrictions on how Facebook handles user privacy.
