'Sweetheart deal': Facebook's $5 billion settlement blasted by politicians and consumer advocates

Image: FTC Presser on Facebook settlement in Washington
Federal Trade Commission (FTC) Chairman Joe Simons listens to FTC Associate Director of Enforcement Division James Kohm during a news conference to announce that Facebook Inc has agreed to a settlement of allegations it mishandled user privacy at FTC Head Copyright Yuri Gripas Reuters
By Jason Abbruzzese and Jo Ling Kent and Cyrus Farivar with NBC News Tech and Science News
Share this articleComments
Share this articleClose Button

The FTC settlement includes a record-setting fine for privacy violations, though the $5 billion only amounts to less than 25 percent of the company's 2018 profits.


Politicians in both parties, technologists and even a former Facebook executive blasted the Federal Trade Commission on Wednesday for its $5 billion settlement with the social media giant.

Critics took aim at the size of the fine, the lack of personal accountability leveled at any Facebook executives, the decision to offer immunity to past privacy violations, and the absence of consideration for ensuring that the company could not use the FTC's rules to stave off competition.

Sen. Ron Wyden, D-Ore. called the agreement, which also forces the company to set up an independent privacy oversight board, a "sweetheart deal."

"For a mere fraction of Facebook's annual revenues, the FTC has given Facebook and executives like Mark Zuckerberg and Sheryl Sandberg blanket immunity for violations of the law that we know about, and even for potential crimes that are still unknown," Wyden said in a statement.

Sen. Josh Hawley, R-Mo., a vocal critic of Facebook and digital advertising, said in a tweet that the FTC settlement "utterly fails to penalize Facebook in any effective way."

"This settlement does nothing to change Facebook's creepy surveillance of its own users & the misuse of user data," Hawley wrote. "It does nothing to hold executives accountable."

The settlement, which Facebook tipped in April, includes a record-setting fine for privacy violations, though the $5 billion only amounts to less than 25 percent of the company's 2018 profits. And while the company will need to submit to a new oversight board, its advertising business will not have to make any major changes.

That business may in fact be made stronger by the FTC's settlement. Alex Stamos, a former chief security officer at Facebook, wrote on Twitter that the ruling may effectively ensure that Facebook never has to let another company use its social graph — the framework of friendships and interests made on the social network.

"Facebook paid the FTC $5B for a letter that says 'You never again have to create mechanisms that could facilitate competition,'" Stamos, who is also an NBC News contributor, said.

As state and national politicians have grown more skeptical of Facebook and other major tech companies, they have also had to confront the reality that their options for investigations are limited. Some states have recently put in place digital privacy laws, but broader oversight relies on rules and regulators best geared toward older industries.

The FTC is the federal government's primary business regulator, with a remit to protect consumers from anti-competitive, deceptive and unfair business practices, but consumer advocates argue that it has not been effectual since changes put in place under the Reagan administration.

FTC Chairman Joe Simons defended the agency's settlement, arguing it was a "real-world choice" and noting that a court battle could have taken years.

"We don't have the authority to fine Facebook ourselves," Simons told CNBC in an interview. "We have to go to court to do that and it's very unlikely that if we went to court, that we would get anything near $5 billion dollars. So this is the choice we have and we think this is a great result given our circumstances."

Rohit Chopra, one of the FTC's two Democratic commissioners, did not agree. In a thread of tweets, Chopra pointed to the company's rising stock price as proof that the fine was ineffectual.

"Breaking the law shouldn't be profitable," Chopra tweeted. "$5 billion is a lot, but Facebook can pay out of its profits."

Share this articleComments

You might also like

Apple launches faster chips, MacBook Pro laptops and cheaper Airpods - what are the upgrades?

What is the metaverse and why is Facebook betting big on it?

Euronews Debates | Profit vs public good: How can innovation benefit everyone?