“The Antitrust Division is reviewing whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers,” the DoJ said. Its review “will consider the widespread concerns that consumers, businesses, and entrepreneurs have expressed about search, social media, and some retail services online.” The goal, the agency said “is to assess the competitive conditions in the online marketplace in an objective and fair-minded manner and to ensure Americans have access to free markets in which companies compete on the merits to provide services that users want.”
“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” said Assistant Attorney General Makan Delrahim of the Antitrust Division, in a statement. “The Department’s antitrust review will explore these important issues.”
Meanwhile, Facebook has agreed to pay a fine of $5 billion and accept federal oversight of its business practices as part of a 20-year settlement of charges from an Federal Trade Commission investigation that the company misled its users on how their personal data would be used and the level of control they had over it. The company will pay an additional $100 million fine to the Securities and Exchange Commission over its lack of transparency with investors on data abuse by data analytics firm Cambridge Analytica (which also was the target of FTC actions related to the deceptive collection of Facebook data for voter profiling).
“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices,” said FTC Chairman Joe Simons in a statement. “The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC. The relief is designed not only to punish future violations but, more importantly, to change Facebook’s entire privacy culture to decrease the likelihood of continued violations. The Commission takes consumer privacy seriously, and will enforce FTC orders to the fullest extent of the law.”
“The $5 billion penalty against Facebook is the largest ever imposed on any company for violating consumers’ privacy and almost 20 times greater than the largest privacy or data security penalty ever imposed worldwide,” according to the FTC.
Facebook did not formally admit guilt as part of the settlement. In a post in Facebook’s newsroom, Facebook VP and General Counsel Colin Stretch wrote that the FTC agreement “will require a fundamental shift in the way we approach our work … . It will mark a sharper turn toward privacy, on a different scale than anything we’ve done in the past.”
Stretch went on to write that the required accountability “surpasses current U.S. law” and “introduces more stringent processes to identify privacy risks, more documentation of those risks, and more sweeping measures to ensure that we meet these new requirements. Going forward, our approach to privacy controls will parallel our approach to financial controls.”
“We’re bringing our privacy controls more in line with our financial controls under the Sarbanes-Oxley legislation,” wrote Facebook CEO Mark Zuckerberg in a Facebook post. “Our executives, including me, will have to certify that all of the work we oversee meets our privacy commitments. Just as we have an audit committee of our board to oversee our financial controls, we’ll set up a new privacy committee of our board that will oversee our privacy program. … To implement this, we’ll have to review our technical systems to document any privacy risks and how we’re handling them. Going forward, when we ship a new feature that uses data, or modify an existing feature to use data in new ways, we’ll have to document any risks and the steps we’re taking to mitigate them. 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.”
Stretch wrote in the post that Facebook had also resolved the related investigation by the SEC with a $100 million settlement. The SEC had alleged that Facebook should have been more transparent with investors about risks related to user data abuse by Cambridge Analytica. Like the FTC investigation, the SEC investigation was prompted by revelations that the data analytics firm was mining massive amounts of information from Facebook for the purpose of voter profiling, and deceiving users in the process. Cambridge Analytica has since filed for bankruptcy, although the FTC has pursued action against its former CEO and one of its app developers.
