Critics said the punishment was too small and that the most important officials should be held personally responsible. (AP: Tony Avelar)
The Federal Trade Commission of the United States approved a deal of about $ 5 billion ($ 7.1 billion) with Facebook for its investigations into user data management by social media, a source familiar with the situation told Reuters .
- Punishment criticized as "a Christmas present five months before" for Facebook
- The agreement would be the largest civil penalty ever paid to the agency
- The source tells Reuters that a final announcement on the transaction could arrive as early as next week
The FTC is investigating allegations that Facebook has inappropriately shared information belonging to 87 million users with the now defunct British political consulting firm Cambridge Analytica.
The probe focused on the fact that data sharing violated a 2011 consensus agreement between Facebook and the regulator.
Investors hailed the news of the agreement and pushed Facebook shares to 1.8 percent, while several powerful democratic politicians in Washington condemned the proposed penalty as inadequate.
The FTC should include in the settlement other restrictions on how Facebook treats user privacy, according to the Wall Street Journal, which also stated that the agency's vote was along the party lines, with three Republicans who voted to approve it and two Democrats against.
The agreement would be the largest civil penalty ever paid to the agency.
The FTC and Facebook declined to comment.
Representative David Cicilline, a democrat and president of a congressional antitrust commission, called the punishment "a Christmas present five months before".
"This fine is a fraction of Facebook's annual revenue and will not make us think twice about their responsibility to protect user data," he said.
Facebook's revenue for the first quarter of this year was $ US $ 1.1 billion while its net income was $ 2.43 billion. It would have been higher, but Facebook has set aside $ US3 billion for the FTC penalty.
While the deal solves a major regulatory problem for Facebook, the Silicon Valley company still faces additional potential antitrust probes while the FTC and the Department of Justice undertake a vast review of competition among the major companies US technology.
He is also addressing criticisms from President Donald Trump and others about his Libra-planned cryptocurrency on privacy concerns and money laundering.
The core business of Facebook is resilient despite pressure
The false steps of Cambridge Analytica, as well as anger over hate speech and misinformation on its platform, have also sparked calls from presidential candidate Elizabeth Warren to Facebook co-founder Chris Hughes for the government to force the social media giant to sell Instagram, purchased in 2012, and WhatsApp, purchased in 2014.
Facebook's first quarter earnings diminished the oncoming transaction with the FTC. (Reuters: Dado Ruvic)
But the core business of the company proved to be tough, since Facebook has exceeded earnings estimates in the last two quarters.
While the details of the agreement are unknown, in a letter to the FTC at the beginning of this year, senators Richard Blumenthal, a Democrat, and Josh Hawley, a Republican, told the agency that even a penalty of $ 5 billion from $ US was too small and that senior officials, including potentially founder Mark Zuckerberg, should be held personally liable.
FTC Commissioner Rohit Chopra, a Democrat, said the agency should hold the leaders responsible for violations of consent decrees if they participated in the violations. Chopra did not respond to requests for comment.
The settlement has yet to be finalized by the Civil Division of the Justice Department and a final announcement could arrive as early as next week, the source said.
A well-informed source of settlement negotiations told Reuters in May that any deal would put Facebook under 20 years of supervision.
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