Published: Sat, July 13, 2019
Markets | By Otis Pena

Facebook shares rise on report of $5B settlement with FTC

Facebook shares rise on report of $5B settlement with FTC

As part of a settlement with the FTC, Facebook has agreed to submit to more comprehensive oversight of how it manages user data but the agreement will not restrict its ability to collect and share data with third parties, according to the NYT report.

The fine punishes Facebook for allowing as many as 87 million users' data to fall into the possession of political consulting firm Cambridge Analytica in violation of a 2012 FTC consent decree.

Although the reported settlement serves as the FTC's largest fine for privacy violations, lawmakers have criticized the size of the fine given Facebook's wealth. Numerous company's critics - including the two Democratic commissioners who voted against it - felt it didn't go far enough, pushing for the agency to actively rein in Facebook's abuses lest other companies follow its example.

The case now moves to the Justice Department's civil division for review.

In 2018, it was revealed that the data was used for other purposes, and that Facebook didn't do enough to close the pipeline of information that Cambridge Analytica had access to.

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"It's also clear that we're going to need Congress and the state attorneys general to take the mantle of any future antitrust investigation of Facebook because Trump's FTC appointees are not up to the task", Miller added.

Although details of the settlement with the U.S. Federal Trade Commission weren't announced, the fine is steep but far from devastating for Facebook.

Public interest groups including Public Knowledge, Public Citizen and the Open Markets Institute said any deal with the FTC should impose remedies that would rein in Facebook's data collection practices in addition to a fine. "Such a financial punishment for purposeful, blatant illegality is chump change for a company that makes tens of billions of dollars every year", Blumenthal said. The FTC reportedly focused on whether the social media giant violated a 2011 consent agreement with the FTC requiring greater privacy protections and transparency for users. A Justice Department spokeswoman declined to comment on the Facebook matter. Around the time the news broke this afternoon, Facebook share prices jumped from around $202 per share to $205.27, its highest price in the past year, and the sort of spike that often signals confidence from Wall Street.

Facebook's revenue for the first quarter of this year was $15.1 billion (roughly Rs. 1,02,840 crores) while its net income was $2.43 billion (roughly Rs. 16,660 crores).

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