Facebook has agreed to pay more than $5 billion (€4.48 billion) to settle its cases with US regulators over the Cambridge Analytica data scandal.

The Federal Trade Commission announced on Wednesday it had agreed a settlement with the social media company, which marked the largest civil penalty the commission has ever handed out.

The agreement will also see Facebook set up a privacy committee, which will be independent from the board, as well as individual privacy compliance officers.

Chairman of the commission Joe Simons said: “The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the [commission]. The relief is designed not only to punish future violations but, more importantly, to change Facebook’s entire privacy culture to decrease the likelihood of continued violations.”

The decision has split the commission internally, however, with the two Democratic commissioners voting against the settlement for not going far enough.

In a dissenting statement, Rohit Chopra, one of the Democratic commissioners, said: “The proposed settlement does little to change the business model or practices that led to the recidivism. The settlement imposes no meaningful changes to the company’s structure or financial incentives, which led to these violations. Nor does it include any restrictions on the company’s mass surveillance or advertising tactics.”

Structural changes

In a response on Facebook, the company’s founder Mark Zuckerburg flagged “major structural changes” at the network.

“We have a responsibility to protect people’s privacy. We already work hard to live up to this responsibility, but now we’re going to set a completely new standard for our industry,” he said.

He said the group’s new privacy committee would be akin to its board-level audit committee and said Facebook would create the new position of chief privacy officer for products.

“Going forward, when we ship a new feature that uses data, or modify an existing feature to use data in new ways, we’ll have to document any risks and the steps we’re taking to mitigate them,” he said.

“We expect it will take hundreds of engineers and more than a thousand people across our company to do this important work. And we expect it will take longer to build new products following this process going forward.”

‘Fundamental shift’

Colin Stretch, Facebook’s general counsel, said in a blog post: “The agreement will require a fundamental shift in the way we approach our work, and it will place additional responsibility on people building our products at every level of the company. It will mark a sharper turn toward privacy, on a different scale than anything we’ve done in the past.”

Separately, the company has also agreed to pay $100 million to the Securities and Exchange Commission, which said Facebook had made misleading disclosures over the misuse of user data.

The cases were both launched in the wake of the Cambridge Analytica data scandal, in which user data were leaked to a political research group through a third-party app. – Copyright The Financial Times Limited 2019