The United States Federal Trade Commission (FTC) has imposed a $5 billion penalty on social media giant Facebook for violating the privacy of its consumers. The commission is penalizing Facebook for misrepresenting the privacy of its users’ personal information.
On the same day, the FTC also filed an administrative complaint against data analytics firm Cambridge Analytica, alleging the use of deceptive tactics to collect user information for voter profiling and targeting.
Besides the hefty penalty, the settlement order requires Facebook to undergo a structural and organizational change in its business operations. In order to ensure greater user privacy and security, the company is now mandated to overhaul its existing approach to privacy from the board-level down.
Failure to Comply with the 2012 FTC Order
The current settlement order arose from Facebook’s non-compliance with FTC’s settlement order of 2012, which prohibited the company from sharing sensitive user data with third parties. In lieu of the 2012 order, Facebook removed the disclaimer to its “Privacy Settings” page which stated that posts shared with a user’s Facebook friends could be shared with third-party applications. However, the social media company continued to share user data with third parties despite removing the disclaimer from its application. Two years later, in April of 2014, the social media company announced that it would put an end to this behavior. However, Facebook separately allowed developers to collect this data until April 2015 if they already had an existing app on the platform. Furthermore, the FTC’s investigation revealed that Facebook did not actually stop sharing user data with third parties until June 2018. The FTC alleged that Facebook violated its act that prohibits deceptive consumer practices. According to the commission, the social media company asked users to provide their phone numbers to enable additional security features without that it intended to use those numbers for advertising-related purposes.
A Complete Overhaul for Facebook: The Dawn of a New Era?
In order to ensure greater accountability among Facebook executives, the settlement order requires the company to establish an independent privacy committee. This privacy committee will be an independent body with its members being appointed by yet another independent nominating committee. In a bid to strengthen external oversight over Facebook, the order also requires the company to terminate app developers who fail to act in accordance with its platform policies. Facebook is also required to encrypt user passwords and regularly scan to detect any passwords stored in plain text. Despite the growing privacy concerns surrounding Facebook, blockchain lead at the company David Marcus has assured that the social media giant’s new cryptocurrency Libra will not be vulnerable to the same misgivings. In a letter to the Senate Banking Committee dated July 8, Marcus assured US lawmakers that transactions on the Libra blockchain would not reveal users identities. He said,“I want to give you my personal assurance that we are committed to taking the time to do this right,”.With Facebook facing a hefty penalty by the FTC for violating user privacy, do you think that its dominance in the social media industry is giving out? Let us know your thoughts in the comments below.
