The Latest: Government case details sneaky Facebook behavior
WASHINGTON (AP) — The Latest on U.S. fine against Facebook over privacy (all times local):
Wednesday's government complaint against Facebook describes numerous cases of sneaky behavior.
When the 2012 Federal Trade Commission consent order took effect, Facebook placed a disclaimer at the top of its privacy settings page telling users "Remember: the people you share with can always share your information with others, including apps." Four months later, the disclaimer was gone.
A similar disclaimer went up on Facebook's mobile app in March 2012 and was gone a year later.
Facebook agreed to a $5 billion fine and various restrictions to settle a case with the FTC. The two Democratic commissioners and some privacy advocates complain that the settlement does not go far enough. The head of the FTC says it's as far as the agency can go with its limited powers on privacy matters.
Facebook is doing just fine on Wall Street, despite being slapped with a record $5 billion fine for its mishandling of personal information.
The company's stock had slipped by less than 1% to $201.51 in Wednesday's midday trading, a few hours after the Federal Trade Commission announced the settlement. The FTC investigation was triggered by revelations that the data mining firm Cambridge Analytica had harvested information on as many as 87 million Facebook users.
Investors are taking the news in stride because the settlement won't change Facebook's lucrative ad system, which is expected to bring in most of the company's projected $69 billion in revenue this year. Facebook is due to release quarterly results later Wednesday.
Facebook's market value is now hovering around $575 billion. That's roughly $40 billion higher than when news of the Cambridge scandal broke 16 months ago, making the FTC fine much easier to swallow.
Facebook says it will restrict Microsoft and Sony's data access as part of its agreement with the Federal Trade Commission.
The FTC announced a $5 billion fine against Facebook over privacy violations and instituted sweeping restrictions on how it can use user data.
In a blog post Wednesday, Facebook says Microsoft and Sony's access comes from old code supporting actions like using Facebook on older versions of the PlayStation video console or syncing friends' contact information with another service. Government investigators found that Facebook had private arrangements with dozens of preferential, or "whitelisted," partners to collect data on users' friends without their knowledge or consent after shutting down the conduit for most developers in April 2015.
Facebook says it was the company's mistake and it's correcting it. It is also reviewing apps on its platform and removing some parts of its existing "API" tools that let third parties develop apps.
The head of the Federal Trade Commission says the agency might have gotten less from Facebook by going to court.
Chairman Joe Simons says the FTC has limited legal powers to enforce privacy rules so it decided to pursue a $5 billion settlement over privacy violations instead of litigating. The two dissenting commissioners say they would have preferred litigation
The FTC announced the settlement on Wednesday.
Simons also says that the FTC didn't depose CEO Mark Zuckerberg because investigators had enough information such as emails and documents to show the scope of the violations.
A former Federal Trade Commission official says the $5 billion settlement with Facebook looks tough, but won't fundamentally change Facebook's practices.
Justin Brookman, a tech policy official now at Consumer Reports, says the deal still gives the company "the right to collect whatever it wants about you."
He speculates that the two dissenting Democratic commissioners preferred litigation over a settlement because the deal doesn't do anything to limit Facebook's data collection.
But he notes the FTC was in a bind due to shortcomings in federal privacy law. He says, "Congress hasn't given them the tools to fix Facebook."
The FTC announced its settlement with Facebook on Wednesday
A former Federal Trade Commission official worries that the agency's $5 billion settlement with Facebook is "essentially a get-out-of-jail free card for Facebook."
Ashkan Soltani, a former FTC chief technologist, says the deal indemnifies the company from government prosecution for all claims prior to June 12. Soltani calls the indemnification highly unusual.
But he says it's encouraging the FTC went beyond just Cambridge Analytica, the firm that spark the probe after revelations it got data on tens of millions of Facebook users without their knowledge or consent.
Soltani does welcome new privacy requirements imposed on Facebook including a prohibition from using telephone numbers ostensibly obtained from users to enable a security feature for ad targeting.
Another FTC requirement highlights Facebook's carelessness with user passwords, requiring it to encrypt passwords it stores on its servers. In March, the company acknowledged leaving hundreds of millions of user passwords readable by employees for years.
The head of the Federal Trade Commission says it has limited legal powers to enforce privacy rules.
For that reason, Chairman Joe Simons says the agency could pursue only relatively limited sanctions against Facebook in its $5 billion settlement. He says the FTC wasn't able to get stiffer penalties such as a higher fine or hold CEO Mark Zuckerberg directly responsible for the Cambridge Analytica scandal.
The FTC's legal authority over privacy enforcement is weaker than what European regulators have.
Simons says pursuing stiffer penalties would have meant long odds in drawn-out litigation with the company.
The two Democratic commissioners who dissented say they would have preferred litigation over the settlement..
George Washington University law professor William Kovacic says the $5 billion settlement between Facebook and the Federal Trade Commission could help bring about change but it all depends on how the FTC implements it.
The settlement calls for Facebook to implement new privacy controls in addition to the fine.
Kovacic says the new mechanisms "is more powerful" than the FTC's original settlement with Facebook in 2012. He says FTC learned from the previous experience.
Enforcing the new terms is another matter but Kovacic believes the FTC "does not want to have this blow up in its face again."
The FTC announced the settlement Wednesday.
The Federal Trade Commission is suing Cambridge Analytica over privacy violations and has settled with key individuals in the Facebook privacy scandal.
The FTC alleges that Cambridge Analytica employed deceptive tactics to harvest tens of millions of people's personal information through a Facebook app developed by an outside researcher, Aleksandr Kogan.
Kogan and former Cambridge Analytica CEO Alexander Nix have agreed to orders that restrict how they conduct business in the future. The settlement requires them to delete or destroy all personal information gathered.
Cambridge Analytica filed for bankruptcy and has not settled the FTC's allegations. The FTC voted unanimously for the complaint.
The news comes as the FTC announced a $5 billion settlement with Facebook over privacy violations partly stemming from the Cambridge Analytica app.
Facebook will pay a $100 million fine to the Securities and Exchange Commission to settle charges it made misleading disclosures about the risk of misuse of Facebook user data.
The SEC says Facebook presented misuse of data as a hypothetical for two years even though it knew third-party developer Cambridge Analytica had actually misused user data.
The settlement is on top of the $5 billion settlement announced Wednesday with the FTC over privacy violations.
Facebook isn't officially admitting wrongdoing as part of either case. But Facebook General Counsel Colin Stretch says in a blog post that Facebook should have disclosed more to investors about the Cambridge Analytica "violation of our policies."
The SEC says Facebook discovered the misuse in 2015 but did not correct its existing disclosure for more than two years. When the company disclosed the incident in March 2018 its stock price dropped.
Facebook's top lawyer says the company's settlement with the Federal Trade Commission will lead to more rigorous management of user privacy — including more technical controls to better automate privacy safeguards.
But outgoing General Counsel Colin Stretch does not admit wrongdoing for a breach of the 2012 FTC consent order for which Facebook was fined $5 billion. Instead, he said in a blog post that the settlement announced Wednesday resolves allegations the company violated the order.
Stretch did say that Facebook's handling of the Cambridge Analytica affair was "a breach of trust between Facebook and the people who depend on us to protect their data."
In the scandal, which prompted the FTC probe, a researcher collected personal data on as many as 87 million Facebook users without their knowledge or consent.
The two Democratic commissioners who dissented in the Federal Trade Commission's decision to fine Facebook $5 billion over privacy violations say litigation would have been a better way to punish the company and CEO Mark Zuckerberg.
Federal regulators announced the fine Wednesday and are implementing new oversight and restrictions on its business.
Commissioner Rebecca Kelly Slaughter says initiating litigation would have been more likely to effectively change Facebook. She says litigation would have provided public transparency and accountability for the company and its leaders and send a message that the commission is tough on ensuring compliance with its orders.
Commissioner Rohit Chopra says commissioners cut off the inquiry too early in favor of the settlement.
The Federal Trade Commission voted 3-2 along party lines in favor of the settlement.
Federal regulators are fining Facebook $5 billion for privacy violations and instituting new oversight and restrictions on its business. But they are only holding CEO Mark Zuckerberg personally responsible in a limited fashion.
The fine is the largest the Federal Trade Commission has levied on a tech company, although it won't much dent a company that had nearly $56 billion in revenue last year.
Zuckerberg must personally certify Facebook's compliance with its privacy programs. The FTC says false certifications could expose him to civil or criminal penalties.
Some experts thought the FTC might fine Zuckerberg directly or limit his authority over the company.
The commission opened their investigation after revelations that data mining firm Cambridge Analytica had gathered details on as many as 87 million Facebook users without their permission.