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Facebook Facing $5 Billion FTC Fine Over Cambridge Analytica Data Sharing

By David Shepardson and Diane Bartz | July 15, 2019
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The U.S. Federal Trade Commission approved a roughly $5 billion settlement with Facebook Inc this week over its investigation into the social media company’s handling of user data, a source familiar with the situation said on Friday.

The FTC has been investigating allegations Facebook inappropriately shared information belonging to 87 million users with the now-defunct British political consulting firm Cambridge Analytica. The probe has focused on whether the data sharing violated a 2011 consent agreement between Facebook and the regulator.

Investors cheered news of the deal and pushed Facebook shares up 1.8%, while several powerful Democratic lawmakers in Washington condemned the proposed penalty as inadequate.

The FTC is expected to include in the settlement other restrictions on how Facebook treats user privacy, according to the Wall Street Journal, which also said that the agency vote was along party lines, with three Republicans voting to approve it and two Democrats opposed.

The settlement would be the largest civil penalty ever paid to the agency.

The FTC and Facebook declined to comment.

Representative David Cicilline, a Democrat and chair of a congressional antitrust panel, called the $5 billion penalty “a Christmas present five months early.”

“This fine is a fraction of Facebook’s annual revenue. It won’t make them think twice about their responsibility to protect user data,” he said.

Facebook’s revenue for the first quarter of this year was $15.1 billion while its net income was $2.43 billion. It would have been higher, but Facebook set aside $3 billion for the FTC penalty.

While the deal resolves a major regulatory headache for Facebook, the Silicon Valley firm still faces further potential antitrust probes as the FTC and Justice Department undertake a wide-ranging review of competition among the biggest U.S. tech companies.

It is also facing public criticism from President Donald Trump and others about its planned cryptocurrency Libra over concerns about privacy and money laundering.

The Cambridge Analytica missteps, as well as anger over hate speech and misinformation on its platform, have also prompted calls from people ranging from presidential candidate Senator Elizabeth Warren to a Facebook co-founder, Chris Hughes, for the government to force the social media giant to sell Instagram, which it bought in 2012, and WhatsApp, purchased in 2014.

But the company’s core business has proven resilient, as Facebook blew past earnings estimates in the past two quarters.

While details of the agreement are unknown, in a letter to the FTC earlier this year, Senators Richard Blumenthal, a Democrat, and Josh Hawley, a Republican, told the agency that even a $5 billion civil penalty was too little and that top officials, potentially including founder Mark Zuckerberg, should be held personally responsible.

FTC Commissioner Rohit Chopra, a Democrat, has said the agency should hold executives responsible for violations of consent decrees if they participated in the violations. Chopra did not respond to requests for comment on Friday.

The settlement still needs to be finalized by the Justice Department’s Civil Division and a final announcement could come as early as next week, the source said.

A source knowledgeable about the settlement negotiations had told Reuters in May any agreement would put Facebook under 20 years of oversight.

(Reporting by David Shepardson and Diane Bartz in Washington and Shanti S Nair in Bengaluru; Editing by Shounak Dasgupta, Rosalba O’Brien and Daniel Wallis)

Related:

  • EU Judges Face Another Major Facebook Privacy Case from Activist Schrems
  • Emails Suggest CEO Zuckerberg Aware of Facebook’s Privacy Faults, WSJ Reports
  • Privacy Practices Probe Could Cost Facebook Up to $5 Billion
Copyright 2025 Reuters. Click for restrictions.

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Written By David Shepardson

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  • Categories: National NewsTopics: Facebook Cambridge Analytica, Facebook data privacy, Facebook privacy, FTC Facebook
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Featured Comment

  • July 15, 2019 at 1:48 pm
    Bill Price says:
    Like or Dislike:
    Thumb up 9
    Thumb down 5

    Most all the tech companies loaned Obama elite techies to do the analytics for free*..
    BUT it’s wrong for Trump to pay for the same services?
    BP
    PS::: And some are still there, now plotting against Trump.
    * See Obama’s Techies in Fast Company Jun 15, 2015

Latest Comments

  • July 19, 2019 at 1:51 pm
    ralph says:
    WRONG. it worked but you had to hit your mouse button rapidly and repeatedly, according to someone who did it for both UP and DOWN votes. They have since fixed it, and I belie... read more
  • July 19, 2019 at 12:10 pm
    ralph says:
    Very good, Yogi...pretty much any kid who has taken a computer class can tell you what a VPN is nowadays. so you literally think someone (allegedly and according to you,, who ... read more
  • July 19, 2019 at 10:41 am
    APOLLOar 11 Bear says:
    I never signed up for Fraudbook, and am truly sorry some of my friends did and are now impacted adversely for their opinions, as well as attempts by criminals (yes, it's a cri... read more

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