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U.S. regulator fines Facebook $5 billion to end privacy probe

Social Media behemoth Facebook will pay a record $5 billion fine to resolve a U.S. government probe into its privacy practices and the social media giant will restructure its approach to privacy according to a Reuters report.

The probe by the U.S. FTC uncovered a wide range of privacy issues. It was triggered last year by allegations that Facebook violated a 2012 consent decree by inappropriately sharing information belonging to 87 million users with the now-defunct British political consulting firm Cambridge Analytica. The consultancy’s clients included President Donald Trump’s 2016 election campaign.

The FTC voted 3-2 along party lines to adopt the settlement, which requires court approval. The Republican commissioners called the settlement “a complete home run” that exceeded any award the commission could have gotten in court. Democratic commissioners said it did not go far enough or require a large enough fine.

Republican FTC Chairman Joe Simons stressed the FTC’s limited authority and desire to avoid a long uncertain court fight.

“Would it have been nice to get more, to get $10 billion, instead of $5 billion, for example, to get greater restrictions on how Facebook collects uses and shares data?” he asked at a press conference. “We did not have those options. We cannot impose such things by our own fiat.”

Facebook confirmed it would pay the $5 billion fine and said the FTC deal would provide “a comprehensive new framework for protecting people’s privacy.” Its share price fell about 1% on Wednesday morning to trade at $200.39.

Democratic FTC Commissioner Rohit Chopra complained that the penalty provided “blanket immunity” for Facebook executives “and no real restraints on Facebook’s business model” and does “not fix the core problems that led to these violations.”

Facebook agreed to pay an additional $100 million to settle allegations that it misled investors about the seriousness of its misuse of users’ data, the Securities and Exchange Commission said.

Under the FTC settlement, Facebook’s board will create an independent privacy committee that removes “unfettered control by Facebook CEO Mark Zuckerberg over decisions affecting user privacy.”

Facebook also agreed to exercise greater oversight over third-party apps and said it was ending access to friend data for Microsoft Corp and Sony Corp.

The Republican majority on the FTC said the settlement “significantly diminishes Mr. Zuckerberg’s power — something no government agency, anywhere in the world, has thus far accomplished.”

Under the deal, Zuckerberg and other Facebook executives must sign quarterly certifications attesting to privacy practices. The FTC said Zuckerberg or others filing a false certification could face civil and criminal penalties.

Facebook also is barred from asking for email passwords to other services when consumers sign up. It is barred from using telephone numbers for advertising if they are obtained in a security feature like two-factor authentication. The company must also get user consent to use facial recognition data.

Facebook said it may find additional problems as it initiates a review of its systems and warned it will take longer to roll out updates as it plans to use “hundreds of engineers and more than a thousand people across our company to do this important work.”

“As part of this settlement, we’re bringing our privacy controls more in line with our financial controls,” Zuckerberg said in a Facebook post. “Going forward, when we ship a new feature that uses data, or modify an existing feature to use data in new ways, we’ll have to document any risks and the steps we’re taking to mitigate them.”

The FTC also said that Cambridge Analytica’s former CEO Alexander Nix and former app developer Aleksandr Kogan had agreed to a settlement restricting how they conduct business.

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