Lawmakers deride FTC settlement as weak on Facebook

Lawmakers on both sides of the aisle on Wednesday derided the Federal Trade Commission’s (FTC) record-breaking settlement with Facebook as weak, arguing that the final agreement does not hit Facebook’s core business model and does not require extensive government oversight of the company accused of flagrantly violating Americans’ privacy.

Almost as soon as the FTC announced its $5 billion settlement with Facebook on Wednesday morning, lawmakers in both chambers emerged with scathing criticism, calling the agreement a slap on the wrist for a company that recorded almost $56 billion in revenue last year.

{mosads}”This fig leaf deal releases Facebook without requiring any real privacy protections—no restraints on future data use, no accountability for top executives, nothing more than chump change financial fines,” Sen. Richard Blumenthal (D-Conn.) said in a statement. “The record is now clear: Facebook egregiously and repeatedly broke the law, turning a blind eye to abuse and putting its rapacious rush to profits ahead of the safety of its users.”

Sen. Ron Wyden (D-Ore.), one of the top privacy hawks in Congress, in a statement slammed the FTC for giving “Facebook and executives like mark Zuckerberg and Sheryl Sandberg blanket immunity for violations of the law we know about, and even for potential crimes that are still unknown.”

“The FTC is sending the message that wealthy executives and massive corporations can rampantly violate Americans’ privacy, lie about how our personal information is used and abused and get off with no meaningful consequences,” he said.

On the other side of the aisle, outspoken tech critic Sen. Josh Hawley (R-Mo.) slammed the deal for doing “nothing to change Facebook’s creepy surveillance of its own users [and] the misuse of user data. It does nothing to hold executives accountable. It utterly fails to penalize Facebook in any effective way.”

As part of the settlement, Facebook is not required to admit to any wrongdoing; the agreement requires the company to create a privacy committee within its board of directors to review company decisions and provide more oversight of Chairman and CEO Mark Zuckerberg. 

The FTC voted for the settlement along party lines, with both Democratic commissioners dissenting in separate statements claiming Facebook escaped relatively unscathed.

“The settlement imposes no meaningful changes to the company’s structure or financial incentives, which led to these violations,” Democratic Commissioner Rohit Chopra said in his statement. “Nor does it include any restrictions on the company’s mass surveillance or advertising tactics.”

“Instead, the order allows Facebook to decide for itself how much information it can harvest from users and what it can do with that information, as long as it creates a paper trail,” he added, referring to FTC settlement’s requirements that Facebook documents its attempts to put privacy safeguards in place.

The settlement emerges after a more than year-long investigation began last year following news that Cambridge Analytica, a British political consulting firm, had bought data on millions of Facebook users without their knowledge from the developer of a personality quiz app.

On Wednesday, the FTC announced Facebook deceived its users about their privacy protections while allowing third parties to harvest their data, alleging the company failed to establish a “reasonable privacy program.”

At a press conference on Wednesday afternoon, the Republican commissioners, including Chairman Joseph Simons, defended the deal as the best possible option for a regulatory agency with limited resources in a country without a federal privacy law.

Simons repeatedly noted that the FTC’s investigation narrowly focused on whether Facebook violated a previous consent order and a 100 year-old FTC statute that was not written for modern-day data privacy issues. He said the FTC faced two options: to take the concessions offered in the settlement or to take Facebook to court, a battle that might have dragged on for years.  

Neither of the Democratic commissioners attended the press conference.

Multiple lawmakers pointed out that the penalties could have been tougher if the U.S. had a privacy law. Since the FTC’s investigation began over a year ago, lawmakers have not been able to work up significant draft privacy legislation as talks have broken down within a privacy working group under the Senate Commerce Committee.

Sen. Maria Cantwell (D-Wash.), the ranking member of the committee who recently chose to step back from the working group, said the decision “underscores the need for strong privacy legislation.”

The FTC’s budget is about $300 million per year, a sum that pales in comparison to the billions of dollars in revenue accrued by the the world’s top tech companies annually. And it only has around 40 staffers focused on privacy specifically. Many lawmakers have floated the possibility that privacy legislation would offer more resources and potentially more authority to the FTC.

{mossecondads}“While $5 billion is a record fine for the FTC, monetary damages are not enough,” House Energy and Commerce Chairman Frank Pallone (D-N.J.) said. “Comprehensive privacy legislation is necessary to strengthen the FTC’s authorities and give it more enforcement tools and resources so that violating consumers’ privacy and breaking public trust isn’t just the cost of doing business.” 

Some lawmakers on Capitol Hill, however, have applauded the settlement, noting that it is one of the largest ever imposed by the FTC related to privacy issues.

“Today’s settlement announced by the FTC against Facebook is one of the largest civil penalties ever imposed by the U.S. government and it is by far the largest privacy or data security settlement the world has seen yet,” top House Energy and Commerce Committee Republicans, Rep. Greg Walden (Ore) and Cathy McMorris Rodgers (Wash.) said in a statement.

But the Republicans vowed to exercise oversight over the FTC to ensure the conditions of the settlement are met and to “continue our work on a federal privacy framework that sets clear rules of the road to protect consumers.”

Senate Commerce Committee Chairman Roger Wicker (R-Miss.) echoed those sentiments, noting “bad actors will be able to continue to abuse data in the online marketplace” without privacy legislation. 

Each FTC commissioner has pushed for legislation to bolster the agency’s work on tech issues. But ultimately, the agency’s Democrats argued the settlement could have gone further with the authority it has. The settlement does not specifically punish  Zuckerberg and the agency did not depose him as part of its investigation.

Zuckerberg said in a post on Wednesday that the settlement will require Facebook to make “major structural changes” to how it does business.