Facebook Inc. (NASDAQ:FB) Ordered Pay A $5 Billion Privacy Settlement

Alan Masterson - July 15, 2019

Facebook Inc. (NASDAQ:FB) will be required to pay a record $5 billion according to a privacy settlement  approved by the US Federal trade commission to resolve the investigation on the data scandal involving Cambridge Analytica.

Facebook $5 billion penalty largest in history of FTC

The social media giant has been under investigation on how it handled user data after it is alleged that it shared information of 87 million users with Cambridge Analytica. The focus of the investigation was to establish whether the sharing of data contravened the 2011 consent agreement between the FTC and Facebook.

This is the largest privacy settlement in the FTC’s history and the most significant action to have been taken against Facebook over a series of data privacy scandals. Investors have cheered the decision to reach a settlement and as a result Facebook has seen its stock up 1.8% following the news.

Democratic legislators have however condemned the fine terming it as inadequate but the FTC is likely to include more restrictions on how the company handles data. Following the mishandling of data by Facebook there has been increased efforts to enact legislation that will enhance privacy of data gathered by technology companies before the start of the 2020 presidential campaign.

Joe Simons the FTC Chairman has been under significant pressure as the investigation dragged as legislators and privacy advocates wanted the regulator to institute a tough penalty to protect user privacy. The deal will leave critics unsatisfied considering that the FTC’s two democratic commissioners voted against the settlement.

Facebook still facing investigations

Despite the deal removing significant burden on Facebook, the company is still facing regulatory scrutiny on a number of fronts. For instance the UK antitrust authorities are evaluating Facebook’s domination of the digital marketing space while the European Union is also considering a range of data-protection investigations.

Equally in the US the department of Justice and the SEC are having separate investigations related to the scandal while the Washington D.C. attorney general has also sued Facebook for its failure to safeguard user data.

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Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ([email protected]) or his Google+ page (https://plus.google.com/103338576216002376250).

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