The Fines are pouring in for Facebook
Over 2 weeks ago the US Federal Trade Commission (“FTC”) approved a $5 billion settlement with Facebook after a year long investigation. The Settlement was approved with a 3-2 vote, with the Republicans in support and Democrats voting against. However, the FTC weren’t the first regulator to fine Facebook over the Cambridge Analytica scandal and they definitely won’t be the last. The UK Information Commissioners Office (“ICO”) issued Facebook with a fine of £500,000 in the October 2018 for serious breaches of data protection law. This came as the result of a wide-ranging investigation into the use of data analytics for political purposes.
The FTC began their investigation into Facebook in early 2018 around the same time as the ICO after claims that approximately 87 million Facebook user’s data had been acquired by a data mining firm, Cambridge Analytica. Their investigation was largely focused around whether the sharing of such data violated a 2012 agreement that was in place between the regulator and the company. Since the investigation started, Facebook vowed to do a better job in protecting the privacy of user’s data. However, not much has changed. Since then, Facebook have acknowledged giving big tech companies such as Amazon and Google access to users’ personal data, as well as admitting that they collected call and text logs from phones running Google’s Android system in 2015.
The findings of the FTC report revealed that Facebook had indeed violated the 2012 FTC order by deceiving users about their ability to control the privacy of their personal data. As a result, rather than just imposing a $5 billion fine, the FTC have decided to form a settlement with Facebook that goes beyond being just a mere monetary penalty. Under the settlement the chief executive of Facebook and their publisher must publish and submit quarterly and annual reports to the FTC. These reports will contain information about whether or not Facebook is complying with a new programme designed to safeguard its users. Any false or misleading statements could potentially lead to additional criminal and civil penalties, according to the Commission.
So why is the FTC’s fine so high compared to the one brought by the UK ICO? The fine issued by the UK ICO was the maximum amount under the old Data Protection Act 1998 which applied at the time that Facebook became aware of the incident having taken place and the ICO commencing their investigation. If the date of knowledge to Facebook had occurred after the 25th of May 2018, the fine would have been brought under GDPR and therefore would have been exponentially larger. It must be taken into account that even though $5 billion seems so much money to the like of me and you, it’s hardly anything to a tech giant like Facebook. Facebook is currently valued at $575 billion. However, their 2nd quarter report published on the 24th of July indicated that their profits have fallen to $2.6 billion from $5.1 billion in the same quarter of the previous year, despite their revenues increasing to $16.9 billion making it clear that the fines brought against Facebook are already having a large impact on their profits.
So, what happens now with FTC’s fine? The settlement needs to be approved by the US Department of Justice before it can be imposed on Facebook. However, it is not clear how long this process will take. On Tuesday 23rd of July the Department of Justice announced that it would hold its own review into online platforms, including social media networks such as Facebook and Twitter and other tech giants such as Google and Amazon. The department aims to examine whether the online platforms gained their high market power through anti-competitive and anti-consumer actions.