FTC will fine Facebook $5 billion over Cambridge Analytica breach

FTC will fine Facebook $5 billion over Cambridge Analytica breach

The Federal Trade Commission approved the fine in a secret 3-to-2 vote last week, sources told USA news media.

Facebook is to pay USA regulators a record $5bn fine to settle the privacy breach investigation following the Cambridge Analytica scandal, according to U.S. media. That said, this reported fine is a mosquito bite to a corporation the size of Facebook.

Notably, the $5 billion FTC fine is intended as punishment for the mishandling of user data, and presumably wasn't meant to increase the wealth of Facebook's primary shareholder.

The FTC's investigation into the social media giant began in March 2018, stemming from allegations that political consultancy Cambridge Analytica, hired by Donald Trump's campaign, improperly obtained the data of tens of millions of Facebook users. The agency started with a probe into whether Cambridge Analytica's misappropriation of 87 million users' data amounted to a breach of the company's 2012 consent decree with it.

According to the report, the deal, which would be the largest penalty ever imposed by the FTC for privacy violations, still needs approval from the Justice Department before it is finalised. Even with the largest fine in FTC history on privacy matters, some of the backlash from Congress signifies that there may be some increasing impetus within the USA government to put legislative privacy safeguards in place.

The largest FTC fine in the historical backdrop of the country represents essentially a month of Facebook's revenue, and the organization made such a decent job of telegraphing it to speculators that the stock cost went up.

Facebook was fined $500,000 in the United Kingdom over the Cambridge Analytica breach, this was the maximum fine that could be applied.

Beyond the regulatory investigations, Cowen analyst John Blackledge noted that Facebook and other big companies also face broader antitrust concerns. One hour after the news of the fine became public, about 4:00 p.m., the price of Facebook's stock rose to $204.87, making Zuckerberg's shares worth a huge $84.1 billion.

Individuals from Congress are as of now opposing this settlement - Rep. David Cicilline is considering it a "Christmas present", while Senator Ron Wyden says the FTC has "failed hopelessly".

Neither Facebook nor the FTC has issued a comment.

Last week's FTC vote was split along party lines due to this factor, with Democrats pushing for stricter sanctions, reports said.

But the company's core business has proven resilient, as Facebook blew past earnings estimates in the past two quarters. Calls for the greater oversight of the company by Democrats were overridden by the Republican members of the commission.

It was always the potential of "non-monetary" penalties and their impact on Facebook's business model that anxious investors, not a simple fine.

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