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- Facebook has just gone through one of the wildest weeks in its 15-year history.
- The Department of Justice, the Federal Trade Commission, and the Securities and Exchange Commission announced fines, lawsuits, and investigations into the tech giant.
- Despite all this, Facebook posted strong second-quarter earnings, sending its stock soaring 5%.
- Visit Business Insider’s homepage for more stories.
This week has been a regulatory maelstrom for Facebook.
The Department of Justice, the Federal Trade Commission, and the Securities and Exchange Commission all took chunks out of the social media this week, many of which stemmed from Facebook’s handling of the Cambridge Analytica scandal.
The bulk of the damage was done on Wednesday, with the blockbuster $5 billion penalty from the FTC being the star attraction — although the DOJ set the tone by announcing its sweeping investigation into big tech earlier in the week.
Here is a rundown of one of the wildest weeks in Facebook’s 15-year history.
The Department of Justice announced a broad antitrust investigation into "big tech."
Yuri Gripas/Reuters
The DOJ announced its blockbuster investigation on Tuesday. It didn’t name any companies, but it referred to "market-leading online platforms" in social media, search, and e-commerce, which was widely translated to Google, Facebook, and Amazon.
This is despite earlier reports that the DOJ and the FTC had split the four big tech companies between their jurisdictions, with the FTC claiming Facebook and Amazon, while the DOJ would get Apple and Google.
The Federal Trade Commission finally hit Facebook with a record-breaking $5 billion penalty.
REUTERS/Yuri Gripas
Facebook first alerted the public to the fact it was expecting a multi-billion FTC settlement during its first-quarter earnings call in April.
The record-breaking deal, which was formally announced on Wednesday, was the result of the Cambridge Analytica scandal. Specifically, Facebook was found to be in violation of a 2012 agreement with the FTC not to hand user data over to third-parties.
"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," the FTC said in a press statement.
On top of the settlement, the FTC also imposed new rules on Facebook.
REUTERS/Yuri Gripas
Part of the settlement with the FTC means Facebook will have to re-jig its board of directors to include an independent privacy committee. The FTC said in its statement that the thinking behind this was to reduce the "unfettered control" CEO Mark Zuckerberg has over user privacy.
"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," said FTC Chairman Joe Simons.
The FTC also included a list of six new privacy requirements it’s imposing on Facebook. These include increased oversight of third-party apps and encrypting user passwords. You can read the full list here.
See the rest of the story at Business Insider
See Also:
- Facebook’s privacy settlement is such a joke, Mark Zuckerberg likely celebrated its signing
- The 6 biggest bombshells and takeaways from tech’s wild week of earnings, from Amazon to Snapchat
- The biggest scandals that rocked Facebook over the past 15 years, from Mark Zuckerberg’s infamous leaked Harvard IMs to a $5 billion fine
Source: Business Insider – feedback@businessinsider.com (Isobel Asher Hamilton)