Facebook warned investors Wednesday it expects to face the largest ever civil penalty imposed by the Federal Trade Commission on a tech company for its mishandling of user data, a privacy breach that could cost the social media giant as much as $5 billion. The final number is still yet to be determined, but the company said in its first quarter earnings report it had set aside $3 billion in anticipation of a settlement with the FTC. The statement amounted to Facebook’s first public admission that it expects to face a game-changing fine, one that could reset the regulatory framework of Silicon Valley, which has increasingly come under scrutiny from lawmakers following revelations about data breaches to Cambridge Analytica during the 2016 election.
Facebook and the FTC are still negotiating what the final settlement will look like in order to end the regulator’s investigation into the company’s privacy and data fumbles, but even if the final amount of the fine is at the low end of the anticipated $3-$5 billion range, it more than 100 times larger than what is currently the most expensive levied against a tech company. As the Washington Post notes, the fine of that size effectively “resets the baseline for future privacy investigations.” It also puts the U.S. closer to its European counterparts who have so far proven far more willing to hold American tech companies to account for brazen behavior with consumer privacy and data.
“The FTC is looking into whether Facebook has violated a settlement it made with the regulator in 2011 which required it to be clear with users about their data privacy and get explicit permission if changes to privacy settings were made,” according to the Financial Times. “That initial settlement was agreed after the FTC found that Facebook had made public user information that it promised would be kept private.”