Facebook reportedly fined US$5bn over Cambridge Analytica privacy violations
- by Patty Hardy
- in Business
- — Jul 16, 2019
Facebook is reportedly set to be handed a record $5bn fine by a United States regulator over privacy violations leading to the Cambridge Analytica scandal.
All that remains is for the U.S. Justice Department to rubber stamp it, and a settlement that The Verge described as an "embarrassing joke" will be finalized.
Finally, Sheera Frenkel, a reporter for the New York Times pointed out that while $5 billion is indeed a large fine - even for the $584 billion Facebook - a large fine was never what concerned the company.
Some analysts noted the irony in that the $5 billion FTC fine meant to punish Facebook for mishandling user data and not to increase Zuckerberg's already stupendous wealth.
The consumer protection agency the FTC started examining Facebook in March 2018 following statements that Cambridge Analytica had obtained the information of tens of millions of its users. The incident occurred in March previous year, which means the social media giant violated a 2011 agreement which forced it to notify users and request clear consent if it wants to share their data.
The fine is the regulator's largest of a technology company, surpassing by far the $22m penalty levied on Google in 2012. Facebook's shares closed at $204.87 on Friday and added 24 cents after hours.
"The FTC just gave Facebook a Christmas present five months early", he wrote.
Though the scope of their involvement with the FTC investigation is unclear, Facebook has confirmed that it has received questions from the FBI and the Securities and Exchange Commission over Cambridge Analytica and that it is cooperating with the inquiry.
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Meanwhile, Sen. Richard Blumenthal, D-Conn., blasted Facebook's entire business model and called for congressional hearings into the FTC's actions in a series of tweets.
It is still unclear what restrictions are on Facebook's handling of user privacy in the settlement.
It may sound counterintuitive, but the logic is simple: Because Facebook expected a fine and planned its annual financials around that expectation, investors reacted positively to that plan playing out - and the fine not being bigger. The stock is up more than 50 percent since the beginning of the year.
As per reports, the Republican commissioners are voting for the decision, while the Dems who may have helped the incumbent U.S President Donald Trump are voting against the resolution of FTC, as, they were the victims of data breaching by Cambridge Analytica.
But why is Facebook getting hit with such a huge fine in the first place?
Cicilline leads the House Judiciary subcommittee on antitrust, which is pursuing a bipartisan investigation of the big tech companies' market dominance. This includes almost a dozen by the Irish Data Protection Commissioner, which oversees privacy regulation in the European Union.
The social media firm posted more than US$15 billion for Q1 of this year alone.
