Facebook to pay $5 billion fine as part of a sweeping settlement with the FTC

While the settlement resolves a major regulatory overhead for Facebook, the embattled social media giant still faces potential antitrust probes from the FTC and Justice Department.

On Wednesday, in a significant development, the Federal Trade Commission stated, Facebook Inc has agreed to pay $5 billion as part of a sweeping settlement to create a board committee on privacy. Facebook has also agreed to new executive certifications that users’ privacy is being properly protected.

Every three months, Facebook’s Chief Executive Mark Zuckerberg will have to certify that the company is properly safeguarding user privacy, said a source briefed on the matter at hand.

According to a report by the Washington Post, the FTC had alleged that Facebook misled users about its handling of their phone numbers and its use of two-factor authentication as part of a wide-ranging probe into Facebook’s handling of user privacy.

Separately, the U.S. Securities and Exchange Commission is expected to announce a related settlement with Facebook for around $100 million over allegations it failed to disclose risks to investors over its privacy practices.

According to another report by the Washington Post, the FTC also has also alleged that Facebook provided insufficient information to nearly 30 million users about a facial recognition tool, an issue that was identified earlier by Consumer Reports.

These developments come midst growing concerns among U.S. policymakers on online privacy which have sparked calls for new legal protections in Congress. The U.S. Justice Department has also launched a broad antitrust probe into the competitive practices of large tech companies which include Facebook.

According to two sources briefed on the matter, the FTC will not require Facebook to admit guilt as part of the settlement. However, the settlement which will be required need to be approved by a federal judge, will contain other significant allegations of privacy lapses.

The $5 billion fine is the largest civil penalty ever paid to the FTC.

Facebook and the FTC declined to comment.

Many in Congress have criticized the reported $5 billion penalty, while noting that in 2018 Facebook reported $55.8 billion in revenue and $22.1 billion in net income. Last week, Senator Marsha Blackburn, a Republican, had said, the fine should have been $50 billion.

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