MARY LOUISE KELLY, HOST:
The Federal Trade Commission announced today that Facebook will pay a $5 billion fine for rampant privacy violations. CEO Mark Zuckerberg will have to answer directly to regulators as part of the settlement. For some perspective, though - the company's quarterly earnings were also announced today. And Facebook made $16.9 billion. Well, here to talk about the deal is NPR's Aarti Shahani.
AARTI SHAHANI, BYLINE: Hi.
KELLY: All right. So give me the highlights. What is this deal that has now emerged between the FTC and Facebook?
SHAHANI: Yes. It was filed today, and it's kind of a follow-up. Back in 2011, Facebook promised the FTC it would stop sharing user data with third parties, outside apps. And according to the FTC's head of enforcement, the company broke its promise while the ink was still drying on that deal. Facebook had turned users into the product. What a person clicks, likes, who their friends are - these got packaged and monetized. Advertisers and other app developers, like Cambridge Analytica, would pay for access. Facebook promised the government it would stop harvesting and sharing data so liberally, but it didn't. Facebook also tricked users into handing over phone numbers. In theory, it was for security for password resets. In reality, the company used those numbers for advertising too. And regulators say Facebook lied about facial recognition. About 60 million Facebook users can expect to get a note telling them the company was tracking without proper permission.
KELLY: Wow. So that is the quite staggering context - 60 million users going to get a note. What in this deal will compel Facebook to change its ways?
SHAHANI: So now going forward, Facebook needs to spell out exactly what data it's collecting and what it's sharing. The government hasn't imposed limits from outside. Facebook will decide for itself. But it will have to give quarterly reports to the FTC and its own board. Zuckerberg has to sign them. And if Facebook gets caught violating, Zuckerberg would be subject to civil as well as criminal penalties. I'd also note Facebook, which is an NPR sponsor, disclosed today that the FTC has begun a separate anti-trust investigation.
KELLY: To your point that you just made about Mark Zuckerberg and that he will be personally accountable if Facebook does not follow the rules going forward - that must count as a big win from the point of view of the FTC.
SHAHANI: Yeah. So the three Republicans at the FTC who approved the deal say, yes. They are getting way more money from Facebook than litigation would ever have gotten and sending a strong message to other CEOs - abuse user privacy, and we'll make you pay. But one FTC member, Democrat Rohit Chopra, who dissented - he thinks Zuckerberg got off the hook.
SHAHANI: Yeah. So the CEO was supposed to make sure his company complied with the original settlement order, OK? He didn't. The FTC could have slammed him with a civil suit now. Regulators would not need to prove that Zuckerberg lied, just that he failed in his duty and there's - that's a much lower burden with plenty of evidence. So Chopra wanted to see Zuckerberg deposed in court and forced to disclose what he knew. Now that opportunity is gone.
KELLY: Well, what is Facebook saying about all this?
SHAHANI: The CEO issued a post today. And I got to say it's classic Zuckerberg - spin the embarrassing development into another example of Facebook's desire to do good and go above and beyond. He wrote, quote, "we already work hard to live up to this responsibility" - meaning protecting privacy - "but now we're going to set a completely new standard for our industry." He said hundreds of engineers and more than a thousand people across the company would implement this privacy-focused vision. What he didn't mention is that his legal team fought tooth and nail on every aspect of this deal. That's according to the FTC. As one regulator put it, Facebook settled and didn't go to court because that would have been quite embarrassing. Company documents would have been revealed.
SHAHANI: Now Facebook gets to break the bad news on the same day as the Mueller hearing.
KELLY: NPR's Aarti Shahani, thanks so much.
SHAHANI: Thank you.
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