US fines Facebook $5bn over Cambridge Analytica, as Europe steps up data enforcement

US fines Facebook $5bn over Cambridge Analytica, as Europe steps up data enforcement
Digital sovereignty

The US Federal Trade Commission (FTC) voted last week to issue a $5 billion (€4.46 billion) fine against Facebook over the Cambridge Analytica scandal, in which they claim that Facebook violated a prior agreement to not misuse consumer data. The move comes as European authorities levy increasingly large fines against companies over their handling of user data, including a record £183 million fine against British Airways last month.

In a 2011 agreement with the FTC, Facebook agreed to gain express consent from its users in order to share their data. But in March of last year, it was revealed that data from up to 87 million users had been shared with Cambridge Analytica, a political consulting firm that worked on Donald Trump’s 2016 campaign. 

While it represents the largest fine the agency has ever issued against a tech company, according to BBC News, it is in line with the company’s stated expectations, and many critics have said it amounts to little more than a slap on the wrist. The FTC’s vote on the fine broke across party lines, with two Democrats opposed, calling for stricter measures. Other Democrats also said the fine was insufficient. 

Facebook told investors in April that it was expecting a fine of up to $5 billion, and that it had already set aside most of the money to pay it, which suggests it will feel little financial pressure. Last week’s reports of the fine resolved any uncertainty and actually boosted Facebook’s shares, which rose 1.8 percent. 

The company is expected to report its second most profitable quarter ever on Wednesday, despite escalating scrutiny and the FTC’s fine. Its shares are valued about 8 percent higher than immediately before the Cambridge Analytica revelations broke in March of 2018. 

Other critics have also noted that the money from the fine will go towards the US Treasury general fund, instead of toward educating users on online privacy, or allowing the FTC to more effectively enforce privacy rules. Last year, an FTC official told Congress that it has 50 percent fewer staffers than it did in the early 1980s.

The fine comes a year after the European Union passed the General Data Protection Regulations (GDPR), among the strictest rules in the world on online privacy. Under the GDPR, companies that violate the regulations can be fined up to 4 percent of their global revenue. But since the Cambridge Analytica incident occurred before the rules were in effect, fines in Europe have been minimal compared to the FTC’s. Italy fined Facebook €1 million last month, after the UK’s privacy watchdog fined the company £500,000.

Photo by Carol M. Highsmith (born 1946) [Public domain]