INSUBCONTINENT EXCLUSIVE:
Federal Trade Commission approved a roughly $5 billion settlement with Facebook this week over its investigation into the social media
company's handling of user data, a source familiar with the situation said on Friday.
The FTC has been investigating allegations Facebook
inappropriately shared information belonging to 87 million users with the now-defunct British political consulting firm Cambridge Analytica
The probe has focused on whether the data sharing violated a 2011 consent agreement between Facebook and the regulator.
Investors cheered
news of the deal and pushed Facebook shares up 1.8%, while several powerful Democratic lawmakers in Washington condemned the proposed
penalty as inadequate.
The FTC is expected to include in the settlement other restrictions on how Facebook treats user privacy, according to
the Wall Street Journal, which also said that the agency vote was along party lines, with three Republicans voting to approve it and two
Democrats opposed.
The settlement would be the largest civil penalty ever paid to the agency
The FTC and Facebook declined to comment.
Representative David Cicilline, a Democrat and chair of a congressional antitrust panel, called
the $5 billion penalty "a Christmas present five months early."
"This fine is a fraction of Facebook's annual revenue
It won't make them think twice about their responsibility to protect user data," he said.
Facebook's revenue for the first quarter of this
year was $15.1 billion while its net income was $2.43 billion
It would have been higher, but Facebook set aside $3 billion for the FTC penalty.
While the deal resolves a major regulatory headache for
Facebook, the Silicon Valley firm still faces further potential antitrust probes as the FTC and Justice Department undertake a wide-ranging
review of competition among the biggest U.S
tech companies.
It is also facing public criticism from President Donald Trump and others about its planned cryptocurrency Libra over
concerns about privacy and money laundering.
The Cambridge Analytica missteps, as well as anger over hate speech and misinformation on its
platform, have also prompted calls from people ranging from presidential candidate Senator Elizabeth Warren to a Facebook co-founder, Chris
Hughes, for the government to force the social media giant to sell Instagram, which it bought in 2012, and WhatsApp, purchased in 2014.
But
the company's core business has proven resilient, as Facebook blew past earnings estimates in the past two quarters.
While details of the
agreement are unknown, in a letter to the FTC earlier this year, Senators Richard Blumenthal, a Democrat, and Josh Hawley, a Republican,
told the agency that even a $5 billion civil penalty was too little and that top officials, potentially including founder Mark Zuckerberg,
should be held personally responsible.
FTC Commissioner Rohit Chopra, a Democrat, has said the agency should hold executives responsible for
violations of consent decrees if they participated in the violations
Chopra did not respond to requests for comment on Friday.
The settlement still needs to be finalized by the Justice Department's Civil
Division and a final announcement could come as early as next week, the source said.
A source knowledgeable about the settlement
negotiations had told Reuters in May any agreement would put Facebook under 20 years of oversight.