Economy

FTC approves roughly $5 billion Facebook settlement

FTC approves roughly $5 billion Facebook settlement

According to the Journal, three Republican commissioners cast their vote for the fine and two Democratic commissioners voted against it, making the FTC ruling likely a partisan decision.

The FTC opened its investigation in March past year, amid concerns that Facebook had allowed British consulting firm Cambridge Analytica to access the data of 87m users, most of whom had not consented.

Once finalized, the fine will become the largest ever levied on a tech company, but it won't make much of a dent in Facebook's reserves, which registered more than $56 billion in revenue a year ago alone.

The settlement would be in line with Facebook´s estimate earlier this year when it said it expected to pay $3 billion to $5 billion for legal settlements on "user data practices".

The punishment follows months of negotiations between the two and is the largest penalty ever levelled by the department in its history.

The $5 billion fine still needs to be OK'd by the Department of Justice, but DOJ "rarely" rejects FTC settlements, the New York Times reported.

Peter Kaplan, a spokesman for the FTC, declined to comment.

The commission's 2011 consent decree with Facebook addressed a litany of deceptive practices by the social-media company.

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"It's also clear that we're going to need Congress and the state attorneys general to take the mantle of any future antitrust investigation of Facebook because Trump's FTC appointees are not up to the task", Miller added.

In April, Facebook disclosed that in Q1, it set aside $3 billion for expenses related to the FTC probe, expecting the investigation to cost it somewhere between $3 billion and $5 billion. This fine is a fraction of Facebook's annual revenue.

The divide between Republicans and Democrats on the matter was irked in large by the latter pushing for tougher oversight of Facebook in addition to the fine.

Andy Stone, a spokesman for Facebook, also declined to comment.

The regulator sought to establish whether the disclosures violated a 2012 agreement in which Facebook promised to better protect its users' privacy. For context, Facebook recorded $15 billion in sales during the fiscal quarter that ended in March.

The Wall Street Journal earlier reported on the vote by the commission.

The FTC fine will likely decrease Facebook's 2019 earnings per share by 60 cents per share, and investors will "likely look past the headwind" given that is it "one-time in nature", Cowen & Co. analyst John Blackledge wrote in a note Friday.