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Facebook reaches privacy agreement with Federal Trade Commission after US$5bn fine

Following on from a US$5bn fine, Facebook has announced an agreement with the Federal Trade Commission (FTC) which will see it provide a new framework for privacy protection in the wake of the Cambridge Analytica data scandal.

The new agreement will require the social media platform to completely change the way it works and put more responsibility on the people building new products. A privacy review of every new product or service will be required, which must be submitted to a third-party assessor every quarter.

Facebook will also be required to obtain purpose and use certifications from apps and third-party developers who use Facebook data.

According to a release posted by Facebook, the accountability from the agreement surpasses that required under current US law, something the platform claims it hopes will be used as a “model for the industry”.

Admitting that the Cambridge Analytica scandal was a “breach of trust between Facebook and the people who depend on us to protect their data”, the platform said its new agreement isn’t about regulators, it’s about building trust with consumers who have since turned away from the social media giant.

“Over the past year we’ve made large strides on privacy. We’ve given people more control over their data, closed down apps and applied more resources to protecting people’s information,” read the statement.

“But even measured against these changes, the privacy program we are building will be a step change in terms of how we handle data. We will be more robust in ensuring that we identify, assess and mitigate privacy risk. We will adopt new approaches to more thoroughly document the decisions we make and monitor their impact. And we will introduce more technical controls to better automate privacy safeguards.”

We've formally reached a settlement with the Federal Trade Commission about privacy. We've agreed to pay a historic…

Posted by Mark Zuckerberg on Wednesday, 24 July 2019

The announcement lines up with Facebook’s second-quarter earnings report and the reveal that the FTC has opened an official investigation into the company.

“The online technology industry and our company have received increased regulatory scrutiny in the past quarter. In June 2019, we were informed by the FTC that it had opened an anti-trust investigation of our company,” read the release.

“In addition, in July 2019, the Department of Justice announced that it will begin an antitrust review of market-leading online platforms.”

The privacy protection agreement reached with the FTC and the US$5bn fine form the results of a separate investigation which was conducted on the business, beginning in March 2018.

As part of the FTC investigation, Facebook said it discovered shortcomings in its system which allowed partners to access data if providing Facebook features on their products. While the company says this data was not abused, it’s loopholes like this the FTC wants to close for the future.

“We will also have a new level of board oversight. A committee of Facebook’s board of directors will meet quarterly to ensure we’re living up to our commitments. The committee will be informed by an independent privacy assessor whose job will be to review the privacy program on an ongoing basis and report to the board when they see opportunities for improvement,” read the Facebook statement.

The FTC is currently conducting probes into both Facebook and Amazon, while the US Department of Justice is covering Google. It’s thought the FTC could bring a case against Facebook around the antitrust investigation.

Facebook has also resolved an investigation performed by the Securities and Exchange Commission, in which the SEC alleged that Facebook’s processes for disclosure to investors surrounding privacy breaches were inadequate. As a result of that settlement, Facebook agreed to pay a US$100m penalty.

The chaos surrounding the company post-Cambridge Analytica hasn’t hurt its bottom line, with the company reporting a revenue of US$16.9b year-over-year and an 8% growth in users.

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