When the Federal Trade Commission delivered its $5 billion privacy settlement with Facebook, the agency’s leaders were harsh: “Facebook betrayed the trust of its users,” Chairman Joe Simons told reporters Wednesday. The company had engaged in “deceptive practices” and let profits shape its handling of millions of people’s data, he and two fellow commissioners charged.
And those were just the agency's Republicans.
The panel’s two dissenting Democrats were so outraged they voted against the historically large fine — calling it too meager to deter the giant social media company from abusing the trust of its users, and saying the agency should have considered taking Facebook to court and held CEO Mark Zuckerberg personally liable.
“Facebook’s violations of law have harmed democracy and society,” wrote FTC commissioner Rohit Chopra in a 21-page dissent. The settlement, fellow commission Democrat Rebecca Slaughter wrote, “leaves the American public vulnerable.”
The Democratic anger over Facebook, echoed in lawmaker reactions to Wednesday’s deal, is the most potent sign yet of the peril Silicon Valley faces if the party regains full power in Washington: Investigations could become more intrusive, and the online industry could face punishments that have never realistically been on the table — including, Chopra suggested, a ban on the kind of behavior-based advertising that supplies Facebook's fortune.
Such repercussions could go even beyond the backlash that tech is experiencing under the Trump administration, which on Tuesday announced a broad Justice Department investigation of possible anti-competitive behavior by the biggest online companies.
Facebook also revealed Wednesday that the FTC opened a separate antitrust investigation into the company last month, a probe that the $5 billion privacy settlement does not resolve.The partisan split on the settlement was one of the most striking elements of Wednesday’s climax to the 16-month-long privacy investigation, which arrived just as most of Washington was gripped by Robert Mueller’s testimony in Congress.
The accusations that the agency had gone light on Facebook came, even though the fine is about 220 times larger than the FTC has ever imposed in similar cases — and was accompanied by what the commission described as an unprecedented set of privacy restrictions for the company. Among other steps, Facebook agreed to install an internal privacy oversight board, restrict some data-use practices and submit Zuckerberg to personal civil and criminal penalties if he falsely certifies to Facebook’s compliance.
Simons and his two GOP colleagues on the commission called the deal “a complete home run” compared with the uncertainties the agency would have faced from going to court.
But Chopra and Slaughter rejected the deal earlier this month in a 3-2 vote. And their arguments come as some Democratic lawmakers, most notably Massachusetts senator and presidential candidate Elizabeth Warren, have urged antitrust regulators to break up industry leaders like Facebook and Amazon.
While it’s arguably much easier for regulators and lawmakers to toss rhetorical grenades while out of power, Wednesday’s responses suggest that a future Democratic administration would not bring a return to the tech-friendly days of the Obama era.
Neither Democratic commissioner attended Wednesday’s morning news conference at FTC headquarters announcing the settlement, but Slaughter said in a statement that the deal, while “exceptional” in its multibillion-dollar fine and new privacy requirements, was no match for Facebook’s size or its record of violations.
Slaughter, a one-time aide to Senate Minority Leader Chuck Schumer, wanted the agency to file a suit accusing Facebook and Zuckerberg of violating a 2012 privacy agreement with the FTC. The violations included allowing data on up to 87 million users to fall into the hands of Cambridge Analytica, a political data firm that had worked for candidates, including Donald Trump.
“The evidence the Commission amassed in its investigation more than justified initiating litigation against Facebook and Mr. Zuckerberg alleging violations of the Commission’s order,” said Slaughter.
Chopra wrote in his own dissent, “When companies can violate the law, pay big penalties, and still turn a profit while keeping their business model intact, enforcement agencies cannot claim victory.” Chopra once served as an assistant director of the Consumer Financial Protection Bureau, an agency that Warren had helped create.
Both Democrats also objected to the FTC’s decision not to require Facebook to admit guilt, and its broad waiver of any future claims for violations the company or its officers might have committed since June 2012. Those could include violations the agency still doesn’t know about, Chopra and Slaughter wrote.
“Hardly a week passes without a news story revealing some potentially illegal conduct by Facebook,” Slaughter wrote.
Simons, though, offered a spirited defense of the agreement — “It’s just awesome,” he said at one point — considering how the agency’s hands were tied. He pointed to the limits on the agency’s legal authorities and the realities of how the case might have turned out if the FTC couldn’t have reached an agreement with Facebook.
The FTC, Simons said, could indeed have targeted Zuckerberg for past mistakes. But, he said: “The question is, did it make sense to do that, because if we had tried to do that, we wouldn’t have settled. We’d be in court. We’d be on a trajectory where we could be in years of litigation and getting much less relief later than we’re getting now.”
“Would it have been nice to get $10 billion instead of $5 billion?, for example?” Simons asked. “To get greater restrictions on how Facebook collects, uses, and shares data? To get a more limited release? To put Mark Zuckerberg’s name in the complaint caption? To the extent that people object to our settlement because it did not have terms like these, we did not have those options. We cannot impose such things by our own fiat.”
Democrats on Capitol Hill have been broadly critical of the deal since its rough outlines first appeared in news stories two weeks ago. Some have focused some of that anger on federal regulators.
“With its settlement with Facebook, the FTC not only fell short, it fell on its face,” said Sen. Ed Markey (D-Mass.), a prominent privacy advocate, in a statement. “Facebook is getting away with some of the most egregious corporate bad behavior in the age of the internet.”
GOP reaction has generally been far more muted: A statement from Rep. Greg Walden (R-Ore.), the highest-ranking Republican on the House Energy and Commerce Committee, and Rep. Cathy McMorris Rodgers (R-Wash.), the top Republican on that committee’s consumer protection subcommittee, said mostly that the settlement’s effectiveness remains to be seen.
But a small handful of Republicans have been especially critical, including Sen. Josh Hawley (R-Mo.), who called the deal “very disappointing.”
“I think this is pretty much a failure,” Hawley told POLITICO. “It does nothing to meaningfully change the behavior of the company. It does not restrain executives.”
Hawley has emerged as both a vocal tech critic and a point person for the Trump administration in its criticisms of Silicon Valley. Trump and Hawley have argued with minimal evidence that companies like Facebook and Twitter are biased against conservatives. And Hawley's outspokenness on the topic of Facebook suggests that the company and others like it might not have the staunch defenders in the Republican Party that other corporate giants have come to expect.
Simons’ fellow Republicans on the FTC strongly backed the deal, though, arguing both that its provisions will change Facebook's ways, and that it is up to Congress to act if it wants stronger privacy protections for Americans.
Commissioner Christine Wilson, a former Delta Air Lines executive, pointed to a provision of the settlement requiring Zuckerberg and other company officials to pledge that the company is holding up its end of the bargain. “When an executive needs to sign under penalty of perjury, he is going to make sure that the attestations that he is making are correct, because civil and criminal penalties — it’s amazing — have a way of focusing the mind,” she said.
And Commissioner Noah Phillips pointed out that the FTC largely has to operate without the benefit of federal privacy laws. Instead, the commission’s case against Facebook was rooted in the 2012 FTC agreement, in which the company had promised not to engage in consumer deception by failing to uphold the privacy pledges it made to users.
“Look, we don't have a national privacy law,” said Phillips, a former aide to Sen. John Cornyn (R-Texas). “And if there were a national privacy law and Facebook violated that law, you know, likely, depending on how the law could have been written, this might have looked different.”
Lawmakers have struggled to pass any such law, even after Cambridge Analytica angered lawmakers of both parties.
Absent such a law and with only its previous agreement with Facebook with which to work, Phillips said, “I think we’ve done an excellent job.”
What’s more, argued Phillips, “It is not the purpose of this investigation to vindicate every concern that the world has about Facebook. We have big national conversations going on about the company and others like it right now. Those are important conversations. They're going to continue on.”
That seems likely.
Rep. Frank Pallone (D-N.J.), chairman of the House Energy and Commerce Committee, said in a statement after the deal was announced: "Facebook has repeatedly demonstrated it prioritizes profit over people. Tough oversight is needed to prevent the abuse of consumer information by Facebook and other companies.”
Cristiano Lima contributed to this report.
Article originally published on POLITICO Magazine