An expensive misstep: Facebook to face fines of up to $5 billion

In March 2018, shortly after it had been revealed that Facebook had allowed Cambridge Analytica[1] to collect data from millions of users without their knowledge, the Federal Trade Commission (“FTC”) announced that it planned to investigate Facebook’s data privacy practices. A year later, the social media giant is preparing for the FTC to impose a series of fines that could reach up to $5 billion,[2] which would be the largest penalty the FTC has ever imposed on a technology company.[3] Facebook had annual revenue of approximately $56 billion last year and, as such, many believe the upcoming penalty to be relatively lenient given the gravity of the charges levied against Facebook. This is especially true in light of the fact that Facebook breached a settlement that it had reached with the FTC seven years earlier. As part of the earlier settlement, Facebook was required to obtain permission from users before distributing data beyond the privacy settings set by each user.

Although relatively limited in its enforcement power with respect to consent decrees, the FTC has been able to leverage the support of the public in its investigation of Facebook. Indeed, lawmakers have been calling for increased scrutiny of tech companies, an area in which the United States is decidedly behind its European counterparts. Despite the record-setting fine set to be imposed, though, many lawmakers believe the penalty to amount to nothing more than a slap on the wrist given Facebook’s financial power. Many lawmakers and other political activists believe that regulators should impose reforms aimed at the ability of technology companies to share data with business partners from the outset, which would have more of a lasting impact on consumer privacy practices in the technology industry.