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Facebook slapped with record $5bn fine over privacy breaches

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The Federal Trade Commission (FTC) has slapped social media giant Facebook with a record $5 billion fine over privacy breaches.

A US government agency, the FTC’s principal mission is the promotion of consumer protection, and the elimination and prevention of anti-competitive business practices, such as coercive monopoly.

In a statement today, the FTC says Facebook will pay a record-breaking $5 billion penalty, and submit to new restrictions and a modified corporate structure that will hold the company accountable for the decisions it makes about its users’ privacy. This settlement resolves the formal complaint by the FTC that the company violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information.

It notes the $5 billion penalty against Facebook is the largest imposed to date on any company for violating consumers’ privacy and is almost 20 times greater than the largest privacy or data security penalty imposed to date worldwide. It is one of the largest penalties ever assessed by the US government for any violation, the FTC says.

The settlement order announced today also imposes unprecedented new restrictions on Facebook’s business operations and creates multiple channels of compliance.

The order requires Facebook to restructure its approach to privacy from the corporate board-level down, and establishes strong new mechanisms to ensure Facebook executives are accountable for the decisions they make about privacy, and that those decisions are subject to meaningful oversight.

“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices,” says FTC chairman Joe Simons.

“The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC. The relief is designed not only to punish future violations but, more importantly, to change Facebook’s entire privacy culture to decrease the likelihood of continued violations. The commission takes consumer privacy seriously, and will enforce FTC orders to the fullest extent of the law.”

“The Department of Justice is committed to protecting consumer data privacy and ensuring that social media companies like Facebook do not mislead individuals about the use of their personal information,” says assistant attorney general, Jody Hunt, for the Department of Justice’s Civil Division.

The FTC points out that following a year-long investigation, the Department of Justice will file a complaint on behalf of the commission, alleging Facebook repeatedly used deceptive disclosures and settings to undermine users’ privacy preferences in violation of its 2012 FTC order.

These tactics allowed the company to share users’ personal information with third-party apps that were downloaded by the user’s Facebook “friends.”

The FTC alleges many users were unaware Facebook was sharing such information, and therefore did not take the steps needed to opt-out of sharing.

In addition, the FTC alleges Facebook took inadequate steps to deal with apps that it knew were violating its platform policies.

In a related, but separate development, the FTC also announced today separate law enforcement actions against data analytics company Cambridge Analytica, its former chief executive officer Alexander Nix, and Aleksandr Kogan, an app developer who worked with the company, alleging they used false and deceptive tactics to harvest personal information from millions of Facebook users.

Kogan and Nix have agreed to a settlement with the FTC that will restrict how they conduct any business in the future.

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