Facebook Negotiating Record Penalty For Alleged Privacy Breaches

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Facebook Inc. (NASDAQ:FB) is reportedly negotiating with the U.S. government a record, multi-billion dollar fine for breaching user privacy, after being accused of sharing personal information regarding 87 million users inappropriately with the now defunct British political consulting firm Cambridge Analytica.

The breaches might cost the Mark Zuckerberg owned network dear because, as per a Washington Post report, the penalty might even go on to exceed the record $22.5 million fine paid by search giant Google in 2012 for bypassing privacy controls in its Safari browser, the highest ever paid by a tech company till date.

Initial reports suggest that the two sides have not yet agreed upon an amount. If the talks between the two break down, the FTC (Federal Trade Commission) could drag Facebook to court. The ensuing legal battle could further tarnish the company’s image after a year marred by scandals and controversies.

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This comes at a time after the Facebook stock has hit an all-time high after reporting a record $16.9 billion in revenue and $6.9 billion profit for Q42018.

Facebook has confirmed being a part of the discussion but avoided commenting directly on the issue so far.

“We have been working with the FTC and will continue to work with the FTC,” was all their spokeswoman had to offer by way of explanation.

The other party, FTC, in an automated response, declined to comment.

What Is The FTC Investigating?

The current negotiation follows an investigation initiated against the social giant by the U.S. Federal Trade Commission (FTC) in March 2018 after charges of sharing data of 87 million users with Cambridge Analytica were levelled against it.

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The regulatory authority is said to be checking whether the social site’s sharing of user data without their consent violates an earlier 2011 agreement regarding safeguarding user privacy. As per this agreement, Facebook had also agreed to improve upon its privacy practices.

As per the aforesaid agreement, the FTC had called upon Facebook to be more transparent and to inform the site users in a clearer manner before going on to share their personal information with third parties.

The same order had also forbidden the networking site from deceiving site users about its privacy policy and initiated regular checks into the manner it handles user data.

The agency was thereby authorised to impose fines in case of violation of these directions. Though Facebook has maintained that it did not breach that record, it is facing investigations from several federal agencies regarding the mishandling of data of millions of its owners.

A hefty penalty against Facebook could stain the site’s already mud-soaked fabric at a time when its owners’ failure to take action against hateful, divisive, inappropriate content and spreading misleading information from Russian operatives has brought it into the line of fire.

“Facebook faces a moment of reckoning and the only way it will come is through an FTC order with severe penalties and other sanctions that stop this kind of privacy misconduct going forward,” said Democratic Sen Richard Blumenthal (Conn.).

The Possible Outcomes

The networking giant with deep pockets could perhaps broker a deal with the regulatory authority by agreeing to pay the fine and, maybe, an agreement to amend its business practices in future. This settlement would then have to be approved by a judge.

The FTC could also ordain Facebook to agree to tougher checkups in future to ensure compliance.

However, Facebook could choose to oppose the proposed penalty and take the matter to federal court. This is something the networking giant will, in all likelihood, want to avoid. Fighting the FTC fine could dent the site’s reputation, something they cannot afford at a time it is facing a slew of other attorneys general.

“They’re haemorrhaging users, they’re haemorrhaging trust, and I think this would only exacerbate the problem,” said Justin Brookman, the director of consumer privacy and technology policy for Consumer Reports.

All tech giants have been distributing user data with impunity at the cost of unsuspecting users for several years. The fine would earmark a new area of scrutiny for these biggies and might bring some respite to users of these platforms.

Better late than never!

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