Facebook, FTC Reportedly Reach $5B Settlement

The Federal Trade Commission and Facebook have reached a tentative decision to settle ongoing privacy issues with a $5 billion settlement, according to a report by The Wall Street Journal.

The FTC voted to approve the settlement with a 3-2 vote along Republican and Democratic party lines, with the former having the majority. The issue will now move to the Justice Department for review, although that’s procedural and usually doesn’t change the outcome.

The settlement will also include new directives on how Facebook can handle the privacy of its users going forward. Facebook was anticipating the fine, and said in April that it was going to have to pay an amount around that number. It put aside money as a result.

The investigation into Facebook started over a year ago when it came out that Cambridge Analytica, a company that worked on the Trump campaign, had access to a trove of user data. The investigation hinged on whether that particular incident violated a previous privacy deal that Facebook made with the agency to better serve customers’ interests.

Facebook has since had other privacy missteps.

Preciously, the most a tech company has ever been fined by the FTC is $22.5 million, which was levied against Google in 2012. The FTC is limited in how much it can fine first-time offenders, but repeat violations are different, and the organization has a more leeway.

Despite the amount being $2 billion more than Facebook had reserved for the fine, shares of the social media giant were up 1 percent on the news.

Capitol Hill is increasingly looking into tech firms, and the White House recently held a “social media summit” — to which Facebook and other tech companies were not invited to attend.

The Justice Department and the FTC also recently announced probes of Google and Apple practices as well. Facebook has upcoming hearings about its proposed cryptocurrency Libra, which has been criticized by banks and leaders worldwide for its potential to disrupt the financial system, as well its potential to be a haven for money laundering.