FTC settlement gives Facebook ‘a lot to celebrate,’ commissioner says

As the Federal Trade Commission handed down a $5 billion fine against Facebook over its privacy dealings, the agency’s two Democratic members have argued the record-breaking penalty isn’t enough.

Commissioners Rohit Chopra and Rebecca Kelly Slaughter voted against the settlement, which was approved in a 3-2 vote, saying it doesn’t go far enough and should have included a higher penalty. The commissioners also believe the FTC should have named CEO Mark Zuckerberg as a defendant in its settlement.

In contrast, the FTC’s three Republican commissioners who voted for the settlement said it holds Facebook’s CEO more accountable for alleged privacy violations than what could have been achieved through litigation.

Chopra blasted the FTC decision, saying it “gives Facebook a lot to celebrate.” He said the FTC decision won’t stop Facebook from engaging in repeat privacy abuses and questioned why the settlement gives Facebook immunity for known and unknown privacy violations.

“Here’s the bottom line: Facebook’s flagrant violations were a direct result of their business model of mass surveillance and manipulation, and this action blesses this model,” Chopra said in a tweet. “The settlement does not fix this problem. It now goes to the court for approval.”

In his dissenting opinion, Chopra said he “strenuously objects” to the FTC’s decision to clear Zuckerberg and other Facebook executives from potentially being held liable for the company’s privacy missteps.

“We should have continued the investigation to obtain more data and evidence on what Facebook and its executives knew and how they profited,” Chopra said in his dissenting statement. “If Facebook failed to cooperate, the Commission had enough evidence to take Facebook and Zuckerberg to trial.”

In an interview with CNBC’s Ylan Mui, Chopra said the FTC did not investigate enough.

“I wanted to investigate further, really uncover what was on the executives’ and the directors’ minds, who was calling the shots, what was their motives,” the Democrat said. “If we don’t even get those answers, how are we going to really know what really happened?”

Slaughter called the settlement “historic,” but raised concerns that it didn’t come down hard enough on Facebook and may not “effectively deter” the company from engaging in future privacy violations. She also alleged there was “sufficient evidence” to name Zuckerberg in the lawsuit.

“Rather than accepting this settlement, I believe we should have initiated litigation against Facebook and its CEO Mark Zuckerberg,” Slaughter said in her dissenting statement. “The Commission would better serve the public interest and be more likely to effectively change Facebook by fighting for the right outcome in a public court of law.”

A trial would have provided “public transparency and accountability” for Facebook, Slaughter added.

The majority voters countered Slaughter’s belief that the FTC should have taken Facebook to court, saying it could have resulted in a much lower penalty, as well as fewer structural changes to Facebook’s board and business operations.

“If the FTC had litigated this case, it is highly unlikely that any judge would have imposed a civil penalty even remotely close to this one,” they wrote.

During a press conference on Wednesday, FTC Chairman Joe Simons reiterated that going to court would have resulted in “much less relief” than reaching a settlement.

Simons also seemingly addressed the Democratic commissioners’ concerns, noting it did not have the authority to impose greater restrictions on Facebook’s data collection practices or impose a larger fine.

“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? To get a more limited release? To put Mark Zuckerberg’s name in the complaint caption?” Simons questioned during the conference. “To the extent people object to our settlement because it does not have terms like these, we did not have those options.”

He added that the agency believes Congress should now consider establishing federal privacy legislation.

The FTC fine is the largest ever imposed by the agency against a tech company, topping the previous high set in 2012 by Google when it was hit with a $22.5 million fine for its privacy practices.

The $5 billion fine represents approximately 9% of Facebook’s 2018 revenue. 

In addition to paying the $5 billion fine, Facebook has agreed to establish a new board committee focused on privacy, which will appoint two privacy compliance officers. Zuckerberg will be required to make quarterly and annual reports to the FTC certifying that the company is following the mandates outlined in the order, among which include stricter oversight over third-party apps and stronger privacy protocols.