Sign up for a daily newsletter defining what matters in business and markets

Stories

Facebook settles with FTC regulators over privacy

Illustration a hand holding a gavel over the facebook logo
Illustration: Sarah Grillo/Axios

The Federal Trade Commission has settled with Facebook over allegations that it "repeatedly used deceptive disclosures and settings to undermine users’ privacy preferences," in a deal that will apply some new oversight to its practices and force it to pay $5 billion.

Why it matters: Revelations last year that the political consultancy Cambridge Analytica had gathered a large trove of Facebook user data, and failed to get rid of it, set off a broader reckoning around data privacy in the era of Big Tech.

Details:

  • Facebook will pay $5 billion under the settlement for violating a 2012 agreement with the FTC.
  • The social giant will have to "conduct a privacy review of every new or modified product, service, or practice before it is implemented, and document its decisions about user privacy," the agency said.
  • The deal establishes a privacy committee on Facebook's board and makes chief executive Mark Zuckerberg personally part of the process of complying with the new restrictions.
  • Separately, the company reached a $100 million settlement with the Securities and Exchange Commission for "making misleading disclosures regarding the risk of misuse of Facebook user data."
  • Before going into effect, the settlement needs the approval of a federal court.

What they're saying: Zuckerberg said in a post that as a result of the deal, Facebook was "going to make some major structural changes to how we build products and run this company."

Yes, but: Democratic policymakers were critical of the settlement, which was approved by the Republican-controlled FTC along party lines.

  • "Even though this settlement is historic, in order to support it I would have to be confident that its combined terms would effectively deter Facebook from engaging in future law violations and send the message that order violations are not worth the risk," said Democratic FTC Commissioner Rebecca Kelly Slaughter in her dissent from the vote approving the settlement.
  • "I do not believe that is the case," she said.

The FTC also sued Cambridge Analytica, and settled with its former top executive and the developer responsible for making the app that collected the Facebook data in question.

The big picture: The settlement will roil an already active debate among lawmakers and advocates over how to best regulate data-hungry online services like Facebook.

  • The FTC announced the deal Wednesday only after it had briefed key congressional committees on its contents, according to a Capitol Hill aide familiar with the matter.

What's next: Facebook has its earnings call on Wednesday afternoon.

Go deeper: