Facebook-FTC Row Could Produce Record Fine

Facebook is set to face a record-setting fine imposed by the Federal Trade Commission (FTC).

Sources have told The Wall Street Journal that the parties are currently in negotiations over a multi-billion dollar fine to settle the FTC’s investigation into Facebook’s privacy practices. Although they haven’t agreed on an exact amount, the fine is expected to be the largest the agency has ever imposed on a tech company.

“Facebook faces a moment of reckoning and the only way it will come is through an FTC order with severe penalties and other sanctions that stop this kind of privacy misconduct going forward,” said Democratic Sen Richard Blumenthal (Conn).

So far, the largest fine the agency has imposed on a tech company was the $22.5 million Google paid to settle a consumer data probe in 2012. A record fine for Facebook would prove the agency “is now prepared to enforce its consent orders,” said Marc Rotenberg, the executive director of the Electronic Privacy Information Center.

“It is an open question at this moment in time whether the Federal Trade Commission is an effective privacy agency, and it is also an open question as to whether the FTC is willing to use its current authority to safeguard consumer data privacy in the United States,” said Rotenberg.

A judge would have to approve any settlement between the two parties, which would likely include the fine and changes to Facebook’s business practices. The FTC could also subject the social media giant to tougher checkups to prove it is complying with the settlement.

If the two parties cannot reach a deal, the matter could wind up in court, which could be a mistake for Facebook. “They’re hemorrhaging users, they’re hemorrhaging trust, and I think this would only exacerbate the problem,” said Justin Brookman, the director of consumer privacy and technology policy for Consumer Reports.