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Facebook Nearing Settlement with FTC Amid Privacy Violations


Terms of the settlement would require Facebook be subject to independent privacy audits for twenty years

By: Chet Chung, Staff Writer

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Via marcopako, flickr

Nearly two years ago, the popular social network Facebook Inc. adopted a new privacy policy that exposed much of the information and data of its then 350 million users, many of whom banded together in protest alongside organizations, such as the newsblog Gawker, the Electronic Frontier Foundation, and the American Civil Liberties Union.

With the two-year anniversary of the privacy scandal approaching, Facebook is closing in on a settlement with the United States’ Federal Trade Commission (FTC) concerning charges that it violated the privacy of its users’ personal information, according to the Wall Street Journal.

The pending settlement, which now only needs final approval from the FTC, represents but the latest in a series of privacy issues that users have reported against the social networking site, which now boasts an active user base exceeding 800 million.


Recently, Bloomberg reported that Facebook has been accused by the Hamburg Data Protection Authority agency of tracking users with cookies and data files that identify users or track their browsing history. Specifically, the agency claims that even those who have deactivated their Facebook accounts may be still under surveillance by the social network. 

But privacy is not the only bane of Facebook’s problems.

One of Facebook’s latest blog posts reveals that, of its over one billion daily logins, 0.06% are compromised. While the percentage itself may seem small, the resulting figure of 600,000 hacked logins per day – or one every 140 milliseconds, as calculated by security software developer Sophos – is certainly startling enough to warrant a major security concern. 

However, with the imminent agreement between Facebook and the government, users may soon feel safer about the personal information they entrust with the social network. The terms of the settlement would require Facebook be subject to independent privacy audits for twenty years, reports the Wall Street Journal.  An anonymous source also told the newspaper that the agreement would bar the networking service from broadcasting a user’s personal information without the user’s permission, though the terms of the agreement will not necessitate users’ consent for changes made to the site. 

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Skeptics conclude…that online firms that manage user information and data will continue to abuse the trust of its users in exchange for revenues. 

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This settlement aligns Facebook with rival social networking service Twitter and popular search engine Google, both of which agreed to similar resolutions earlier this year involving security audits. Yet these three online giants may not be the only victims of FTC crackdowns on privacy violations, as legal experts believe the agreement will likely have a ripple effect on other internet organizations dealing with sensitive user information. 

“Companies would be wise to pay attention to this trend and implement privacy programs that include comprehensive assessments of their privacy practices,” said Lisa Sotto, head of the Global Privacy and Information Management Practice at Hunton & Williams law firm in New York, to the Wall Street Journal.

The impact of Facebook’s privacy breaches has been felt worldwide, from Ireland to Germany, both of which have taken some form of government action against the social network. 

Nonetheless, skeptics conclude that in spite of Facebook’s agreement, online firms that manage user information and data will continue to abuse the trust of its users in exchange for revenues. 

“Users are not social networking sites’ primary customers,” said Andrew Charlesworth, director of the centre for IT and Law at the University of Bristol, to BBC News. “Advertisers and marketers are.”

And with Facebook preparing for the issuing of its IPO early next year, profits and earnings are no doubt at the company’s helm. 

As Michael Fertik, CEO of reputation management firm, Reputation.com, told the Huffington Post, “It’s potentially impossible to run a media company and care deeply about privacy. It doesn’t mean you don’t care – but you don’t care first because the only thing you have to sell is access to information.”

ARB Team
Arbitrage Magazine
Business News with BITE.

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