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Facebook FTC Deal Shows Need for Privacy Bill, Lawmakers Say

Facebook FTC Deal Shows Need for Privacy Bill, Lawmakers Say

(Bloomberg) -- Facebook Inc.’s $5 billion settlement agreement with the Federal Trade Commission to resolve years of privacy violations sparked criticism from privacy experts and lawmakers from both parties. Some said it shows more than ever the need to resume efforts to craft a federal privacy law, which are currently stalled in Congress.

The reaction unfolded as the company exceeded analysts’ estimates for advertising sales in its second quarter earnings report. Facebook also disclosed that the FTC has opened a formal antitrust investigation into its business.

Under the settlement, the company must, in addition to paying the fine, end certain types of data collection, evaluate the privacy impact of future offerings, certify compliance regularly and restructure its board to empower independent directors, which would end Chief Executive Officer Mark Zuckerberg’s final say on privacy issues. The company won’t be required to make significant changes to its core data-driven ads business, however.

Here’s what observers are saying about it:

Congressional Democrats

  • Representative Frank Pallone of New Jersey, who chairs the House committee leading the chamber’s privacy push said fines weren’t enough and consumer data regulation must strengthen the FTC. “Facebook has repeatedly demonstrated that it prioritizes profit over people,” Pallone said. “Tough oversight is needed to prevent the abuse of consumer information by Facebook and other companies.”
  • Senator Richard Blumenthal of Connecticut, who is working on the Senate’s privacy push: “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. 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. The American public is owed more than another Zuckerberg apology and an anemic FTC settlement.”
  • Senator Ed Markey of Massachusetts, a longtime childrens’ privacy advocate: “It still gets to move forward with its Libra cryptocurrency. If Facebook cannot be trusted with America’s private information, why should it be trusted with its money?”

Congressional Republicans

  • Senator Roger Wicker of Mississippi, who chairs the Senate committee leading the chamber’s privacy push, said the settlement shows “the great work the FTC can do” but also shows the need for a bill. “Without a robust, comprehensive federal privacy law covering data collectors and consumers, bad actors will be able to continue to abuse data in the online marketplace,” he said.
  • Senator Josh Hawley of Missouri, one of the foremost Republican tech critics, tweeted: “This settlement does nothing to change Facebook’s creepy surveillance of its own users & the misuse of user data.”
  • Representatives Greg Walden of Oregon and Cathy McMorris Rodgers of Washington State, the top Republicans on the committee and subcommittee overseeing the House privacy push, said: “There are many questions about how the new requirements on Facebook will be enforced and what impact that will have on users’ privacy moving forward. Those details will really matter.” They said they would continue work on privacy legislation and continue oversight of the FTC to “ensure these settlement order terms are enforced to protect the American public.”
  • Senator Marsha Blackburn of Tennessee, a longtime big tech critic, said she would like to hear again from Zuckerberg. “He’s going to have to personally certify what their standards and practices are, so I think hearing from him would be appropriate.”

Consumer Groups

  • Jeff Chester, the executive director of the Center for Digital Democracy, said “It’s déjà vu all over again.” It was his complaint led to a previous FTC consent order with the company. Facebook’s business model means its interests are always opposed to privacy, Chester said, adding that he would like to see a new data agency. “The FTC is an unindicted co-conspirator when it comes to why Americans have lost their privacy,” he said. “The FTC has looked the other way for years regardless of what party is in power.”
  • Electronic Privacy Information Center President Marc Rotenberg called “the FTC’s action is too little, too late.” Rotenberg, who co-led the earlier complaint with Chester, said that “American consumers cannot wait another decade for the Commission to act against a company that violates their privacy right.”
  • Charlotte Slaiman, policy counsel for the Washington group Public Knowledge, said the settlement doesn’t offer much protection. “Facebook retains complete control over when to share your data outside of Facebook, as long as the company complies with the privacy policy that it gets to write,” Slaiman said. “The settlement also protects Facebook from further enforcement on other potential violations that we may not even know exist.”

Privacy Experts

  • Nicol Turner Lee, a fellow at the Brookings Institution’s Center for Technology Innovation said that the settlement was “a huge demonstration that the FTC has the capability to be the principal enforcer around privacy concerns” by both assessing fines and trying to adjust the company’s governance. She added, though, that the company has done “damage” that can’t be addressed, and it remains to be seen if the changes will take hold, either at Facebook or in the broader economy, especially if a privacy bill stalls. “We’re applying Band-Aids to wounds as opposed to addressing the larger sore, which is the lack of comprehensive baseline legislation,” she said.
  • Former FTC Chief Technology Ashkan Soltani tweeted: “If this were a game of chess, Facebook just checkmated FTC, flipped the board so it couldn’t be played again, and covered the whole thing up with a blanket.”

--With assistance from Rebecca Kern.

To contact the reporter on this story: Ben Brody in Washington at btenerellabr@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, John Harney

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