The Federal Trade Commission on Wednesday slapped Facebook with the largest fine the social media network has faced yet, approving a record $5 billion settlement with the tech giant over its privacy policies.
The settlement, which was approved along party lines in a 3-2 vote by FTC commissioners, mandates Facebook create independency from Facebook CEO Mark Zuckerberg’s “unfettered control” and unilateral decision making. Facebook will now be forced to create an independence privacy committee on its board of directors.
“The committee’s members will be nominated b an independent nominating committee and can only be fired by a two-thirds voting shares, which would prevent Zuckerburg from controlling the vote with his share power,” CNBC reports.
A settlement of the provision also establishes new mechanisms to ensure the company is held accountable for any future violations.
The settlement prompted shares on Facebook to drop nearly a half percent, decreasing its market cap by $1 billion, which represents 9 percent of the company’s 2018 revenue.
The largest fine imposed on Facebook prior to Wednesday’s settlement was $22.5 million in 2012 against Google for breaching its privacy practices.
The FTC began investigating Facebook following reports that political consulting firm Cambridge Analytica accessed the data of 87 million Facebook users without authorization and warned the tech giant violated its terms of agreement to notify users when their data is shared with third parties.
Facebook also agreed to pay $100 million to settle charges by the Security and Exchange Commission, the SEC announced Wednesday. According to the SEC, Facebook brazenly lied, describing data misuse as hypothetical when it was aware of real instances of its users’ data being illegally disseminated to third parties.
SEC’s deputy director of enforcement Stephani Avakian told reporters the $100 million settlement is the “highest penalty the SEC has ever assessed for this kind of disclosure failure.”
While Facebook was not required to admit or deny guilt as part of the deal, Zuckerberg promised to “get this right” following the record-breaking $5 billion settlement.
“We have a responsibility to protect people’s privacy,” he said in a statement posted to his Facebook page. “We already work hard to live up to this responsibility, but now we’re going to set a completely new standard for our industry.”
Other executives will closely monitor whether future products, specifically those that use data in new or revised was, to meet privacy commitments, Zuckerberg continued.
Facebook has appointed one of its “most experienced product leaders” to a new role of chief privacy officer for products, he explained. “We expect it will take hundreds of engineers and more than a thousand people across our company to do this important work. And we expect it will take longer to build new products following this process going forward.”
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