The Federal Trade Commission voted this week to approve a roughly $5 billion settlement with Facebook that could end an investigation into its privacy practices, according to a person familiar with the matter but not authorized to speak on the record, a deal that could result in unprecedented government oversight of the company.
The settlement — adopted with the FTC’s three Republicans supporting it and two Democrats against it — could end a wide-ranging probe into Facebook’s mishandling of users’ personal information that began more than a year ago.
The FTC’s $5 billion punishment against Facebook sets a new record as the largest penalty ever assessed against a tech company that broke a past promise to the government to improve its privacy practices. The matter from here rests in the hands of the Justice Department, which typically must finalize FTC settlements, though DOJ rarely has upended them.
Facebook warned investors earlier this year it could face an FTC fine as high as $5 billion. Wall Street appeared to reward the company for setting aside a large portion of that penalty earlier this year, as the company’s stock rose almost 2 points following news of the settlement Friday.
The FTC declined to comment on the matter. Facebook also declined to comment.
The Federal Trade Commission has reportedly slapped Facebook with a record-setting $5 billion fine over its privacy lapses, including a massive data leak to political research firm Cambridge Analytica.
The staggering penalty, which was approved on a 3-2 vote with Republicans in support of it and Democrats against, according to the Wall Street Journal (paywall), dwarfs the previous record-holder, Google, which in 2012 was fined $22.5 million by the FTC for misleading users on how they could limit online tracking tools.
For Wall Street, however, the $5 billion figure looked like a slap on the wrist compared with fears that the regulator would impose an even harsher penalty.
Other possible remedies, according to analysts, included pressing for a possible breakup of the company, reversing its acquisitions of Instagram, WhatsApp, or both.