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Home / Business / How Facebook tried to fight a multi-billion dollar FTC fine

How Facebook tried to fight a multi-billion dollar FTC fine



The arguments put forward by Facebook lawyers in a white paper Feb. 28 – obtained by The Washington Post through a federal request for open records – shed new light on the tech giant's bare knuckle, efforts behind the scenes at times to spare them toughest penalties from the Federal Trade Commission. The case resulted in a record-breaking settlement that some critics still dismiss as too weak.

The FTC's investigation stemmed from Facebook's entanglement with Cambridge Analytica, a political consulting firm that incorrectly accessed tens of millions of Facebook users' personal information. The incident, along with Facebook's other data problems, led FTC attorneys to conclude that the tech giant had violated a previous government scheme to improve privacy practices. This opened the door for the agency to seek civil penalties.

Facebook will have to pay record-breaking fines for violating users' privacy. But the FTC wanted more.

To begin with, FTC employees estimated that Facebook's misdeeds could result in tens of billions of dollars, The Post reported earlier this summer, citing several who were familiar with the case. It is not clear whether the agency presented this amount to Facebook before the company's white paper in February; The key number was redacted from the copy given to The Post. But the document still included a harsh response from Facebook, calling the FTC's proposed fine "excessive, arbitrary and capricious" and saying it violated the Constitution and the FTC's governing laws.

The "proposed punishment is unconstitutional, unconstitutional and not supported by the allegations in the draft complaint," the lawyers wrote. "No court would entertain such a punishment, nor Facebook."

The legal support between Facebook and the FTC illustrates the precarious decision that government regulators ultimately had to make ̵

1; try to fight the tech giant in federal court, embark on a protracted, painful legal battle, or settle with the company and achieve whatever relief Facebook was willing to stomach.

Finally, the agency, led by Republican Joe Simons, chose the last option. The resulting $ 5 billion civil penalty against Facebook set a record for a federal privacy fine. The agency also forced Facebook to submit to unparalleled federal oversight. Announcing the deal in July, Simons and his Republican colleagues said in a statement that it was "very unlikely that the commission could have achieved this magnitude of injunctive relief if we had proceeded with litigation. "

But the penalties proved insufficient for many privacy advocates, including the FTC's two Democratic members and congressional legislators from both parties. Critics said the fine should have been higher and the penalties tougher – and some said a court battle might have been necessary to provide full relief to consumers.

"The fine we paid is unparalleled. It is the largest fine in the history of the Federal Trade Commission and exceeds what the FTC would have been able to achieve in court, as experts have said," company spokeswoman Monique said Hall on Monday in a statement, adding that the settlement included "substantial accountability and supervisory measures. ”

The FTC declined to comment.

For Facebook's Zuckerberg, the FTC settlement could bring a new era of accountability

Key to Facebook's analysis was that consumers were not harmed – that they did not suffer personal harm, such as loss of money, from the company's malpractice of their personal information . As a result, Facebook said, legal precedent gave a civil penalty "substantially lower" than the maximum allowed by law. Facebook also claimed that it "did not profit from alleged breaches" on users' privacy.

When they did, Facebook lawyers sought to use the FTC's earlier words against it, pointing to the commission's previous record for a privacy violation: a $ 22.5 million penalty imposed on Google in 2012.

The FTC at that time Google blamed for misunderstanding users' ability to control when they were tracked online. When advocates for privacy challenged the settlement in court as too weak, federal regulators said their work was "sufficient" to protect consumers and would send a message to the tech industry. Several years later, Facebook said its wrongdoing was "comparable," justifying a similar penalty for mishaps.

Privacy groups have also challenged the FTC's settlement with Facebook, which is awaiting approval from a federal judge. The Electronic Privacy Information Center filed a lawsuit earlier this year arguing that the agreement "fails to safeguard the interests of Facebook users."


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