The Federal Trade Commission approved a record $5 billion settlement Wednesday with Facebook over the company’s privacy policies.
Shares of Facebook were down slightly following the announcement, but turned positive in the afternoon, up about 1.1% by the end of trading. Facebook recouped more than what it will have to pay out for the settlement through what it gained in market value Wednesday. The stock added more than $6 billion to its market cap to bring it over $584 billion.
The fine is the largest ever imposed by the FTC against a tech company. The previous high was a 2012 $22.5 million fine against Google for its privacy practices.
The $5 billion fine against Facebook represents approximately 9% of the company’s 2018 revenue.
The 20-year settlement includes provisions that aim to create a level of independence from Facebook CEO Mark Zuckerberg’s decision-making.
It was approved along party lines in a 3-2 vote by the agency’s commissioners. The two dissenters, both Democrats, said it didn’t go far enough.
The FTC started probing Facebook in March 2018 after reports that political consulting firm Cambridge Analytica had accessed the data of 87 million Facebook users without authorization. The agency was concerned that Facebook had violated the terms of a previous agreement, which required it to give users clear notifications when their data was being shared with third parties.
BDST: 1345 HRS, JUL 25, 2019