Facebook to Pay $5 Billion in Settlement Fees Over Privacy Claims

Person on tablet.

Person on tablet.

Lately, Facebook has been under severe scrutiny due to privacy violations. On Wednesday, however, Facebook agreed to pay $5 billion to resolve the privacy investigation. This settlement will also make some changes in how the board of directors at the company protects its user’s privacy as well as changing how Facebook ads work.

Chief Executive Officer Mark Zuckerberg has had the final say in many of Facebook’s privacy decisions, some of them not so great. However, on Wednesday, Facebook agreed to a settlement which would give that authority over to a privacy committee.

The agreement also changes some things about Facebooks third-party apps, like how they use your phone number for advertising purposes. The social media behemoth will also have to start conducting privacy reviews and accept new privacy certifications.

“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,” Facebook said in a statement. “It will mark a sharper turn toward privacy, on a different scale than anything we’ve done in the past.” Facebook said it hopes the settlement, which requires more accountability than what is currently required in the U.S., will be “a model for the industry.” [1]

Although paying $5 billion for a fine might sound like a lot, Facebook had, earlier, set aside $3 billion for settlement fees and continued to make over $56 billion in 2018 [2]– even after their name was dragged through the mud. The fact that the companies shares have fallen less than 1 percent since they’ve agreed to the settlement gives testimony to how powerful Facebook is in today’s society.

“The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC,” Chairman Joseph Simons said in a statement. “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.”

“We have heard that words and apologies are not enough and that we need to show action,” Facebook said. “By resolving both the SEC and the FTC investigations, we hope to close this chapter and turn our focus and resources toward the future.” [3]


Notes:

  1. ^Brody, Ben and David McLaughlin. “Facebook to Pay $5 Billion to Settle FTC Privacy Claims.” Bloomberg.com, 24 July 2019, www.bloomberg.com/news/articles/2019-07-24/facebook-to-pay-record-5-billion-to-settle-ftc-privacy-claims. (go back↩)
  2. ^Feiner, Lauren. “FTC slaps Facebook with record $5 billion fine, orders privacy oversight.” CNBC, 24 July 2019, www.cnbc.com/2019/07/24/facebook-to-pay-5-billion-for-privacy-lapses-ftc-announces.html. (go back↩)
  3. ^McKinnon, John D. and Ryan Tracy. “Facebook Agrees to Pay $5 Billion in FTC Settlement.” WSJ, 24 July 2019, www.wsj.com/articles/facebook-agrees-to-pay-5-billion-in-ftc-settlement-11563971400. (go back↩)

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