Facebook CEO Mark Zuckerberg. Photo: Artur Widak/NurPhoto via Getty Images
News that Facebook reached a $5 billion settlement with the Federal Trade Commission had critics fuming and Facebook shareholders breathing a sigh of relief.
Driving the news: The New York Times and the Wall Street Journal both reported on Friday afternoon that the FTC had voted 3-2 along party lines to approve a deal, with Democrats reportedly holding out for tougher conditions.
- In after-hours trading on Friday, Facebook shares rallied. Shares opened down Monday morning.
- The company's critics blasted the settlement for both the size of the fine and the apparent lack of tough new restraints on its conduct.
- The Department of Justice still needs to sign off on the deal.
Capitol Hill Democrats and advocates of aggressive new privacy regulation panned the deal.
- Sen. Richard Blumenthal (D-Conn.) called the $5 billion fine, the largest in FTC history, a "tap on the wrist" for the mammoth Facebook.
- Presidential candidate Sen. Elizabeth Warren (D-Mass.) said the settlement was a "victory for Facebook."
- Sen. Mark Warner (D-Va.) said that with "the FTC either unable or unwilling to put in place reasonable guardrails to ensure that user privacy and data are protected, it's time for Congress to act."
What we don't know: The exact terms of the settlement, which is expected to put restrictions of some kind on Facebook's behavior that go beyond just the financial penalty.
- Both the FTC and Facebook declined to comment.
Background: It has been 475 days since the FTC confirmed that it was investigating the company, following revelations that a researcher associated with consultancy Cambridge Analytica had swept up Facebook user data.
- Critics charged that Facebook had violated a previous 2012 settlement with the FTC that required it to take more care when it came to user privacy, allowing the agency to levy greater penalties.
The big picture: The FTC inquiry is far from the only regulatory probe facing the company.