Facebook will receive a US$5 billion fine from American regulators for its failure to protect users’ privacy. Federal Trade Commissioners voted 3-2 in favour of the settlement with the social media behemoth, to conclude its long-running probe stemming from the Cambridge Analytica scandal, according to people familiar with the matter.

The Wall Street Journal broke the news over the weekend. The settlement is yet to be finalised by the U.S Justice Department’s civil division and it remains unclear how long that process will take, but the outcome is not expected to change.

When the US$5 billion fine is handed down it will easily eclipse the previous record penalty for breaching an FTC privacy order; a US$22.5 million fine handed to Google in 2012.

The FTC probe has been underway for more than a year and a multibillion dollar fine was widely expected. Facebook financial statements showed the company had set aside US$3 billion for the fine earlier this year.

The American regulator’s 3-2 vote was split on party lines with Republicans outvoting Democrats, the latter pushing for more oversight of Facebook. One point of difference, according to the WSJ, was how accountable Facebook chief Mark Zuckerberg should be for his company’s breaches.

$5B foundations

In 2018 a Guardian investigation revealed Facebook user information had been used by data firm Cambridge Analytica, including an attempt to influence voters in the last US presidential election. The data had been collected via a Facebook app which when downloaded by users provided their data and friend’s data.

While the app’s collection of data was within Facebook’s terms at the time, Cambridge Analytica’s eventual acquisition of the data was not.

In 2012 Facebook agreed with the FTC to better protect user privacy. While Facebook had skirted that responsibility for years, the 2018 Cambridge Analytica scandal finally triggered the FTC probe.

The multi-billion dollar fine it has produced will have a modest impact on Facebook, which records quarterly revenues north of US$15 billion and has continued to attract users despite its scandals. A more concerning outcome for Facebook would be tighter regulation and oversight of its data practices.

The company has argued against regulation for most of its history, pushing only recently for the “right” regulation. However, Facebook is so firmly entrenched as the de facto social media platform — over 2 billion people log on to Facebook each month — some fear heavy regulation on data collection now could insulate the company from competition.

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