Cambridge Analytica sued by FTC following Facebook's $5 billion settlement

The Federal Trade Commission is suing Cambridge Analytica over privacy violations and has settled with key individuals in the Facebook privacy scandal. The FTC alleges that Cambridge Analytica employed deceptive tactics to harvest tens of millions of people’s personal information through a Facebook app developed by an outside researcher, Aleksandr Kogan. [caption id=“attachment_4412057” align=“alignnone” width=“1280”]  The nameplate of political consultancy, Cambridge Analytica. Image: Reuters[/caption] Kogan and former Cambridge Analytica CEO Alexander Nix have agreed to orders that restrict how they conduct business in the future. The settlement requires them to delete or destroy all personal information gathered. Cambridge Analytica filed for bankruptcy and has not settled the FTC’s allegations. The FTC voted unanimously for the complaint. The news comes as the FTC announced a $5 billion settlement with Facebook over privacy violations partly stemming from the Cambridge Analytica app. Facebook will pay a $100 million fine to the Securities and Exchange Commission to settle charges it made misleading disclosures about the risk of misuse of Facebook user data. The SEC says Facebook presented misuse of data as a hypothetical for two years even though it knew third-party developer Cambridge Analytica had actually misused user data. The settlement is on top of the $5 billion settlement announced Wednesday with the FTC over privacy violations. Facebook isn’t officially admitting wrongdoing as part of either case. But Facebook General Counsel Colin Stretch says in a blog post that Facebook should have disclosed more to investors about the Cambridge Analytica “violation of our policies.” The SEC says Facebook discovered the misuse in 2015 but did not correct its existing disclosure for more than two years. When the company disclosed the incident in March 2018 its stock price dropped. Facebook’s top lawyer says the company’s settlement with the Federal Trade Commission will lead to more rigorous management of user privacy — including more technical controls to better automate privacy safeguards. But outgoing General Counsel Colin Stretch does not admit wrongdoing for a breach of the 2012 FTC consent order for which Facebook was fined $5 billion. Instead, he said in a blog post that the settlement announced Wednesday resolves allegations the company violated the order. Stretch did say that Facebook’s handling of the Cambridge Analytica affair was “a breach of trust between Facebook and the people who depend on us to protect their data.” In the scandal, which prompted the FTC probe, a researcher collected personal data on as many as 87 million Facebook users without their knowledge or consent. The two Democratic commissioners who dissented in the Federal Trade Commission’s decision to fine Facebook $5 billion over privacy violations say litigation would have been a better way to punish the company and CEO, Mark Zuckerberg. Federal regulators announced the fine Wednesday and are implementing new oversight and restrictions on its business. Commissioner Rebecca Kelly Slaughter says initiating litigation would have been more likely to effectively change Facebook. She says litigation would have provided public transparency and accountability for the company and its leaders and send a message that the commission is tough on ensuring compliance with its orders. Commissioner Rohit Chopra says commissioners cut off the inquiry too early in favour of the settlement. The Federal Trade Commission voted 3-2 along party lines in favour of the settlement. Federal regulators are fining Facebook $5 billion for privacy violations and instituting new oversight and restrictions on its business. But they are only holding CEO Mark Zuckerberg personally responsible in a limited fashion. The fine is the largest the Federal Trade Commission has levied on a tech company, although it won’t much dent a company that had nearly $56 billion in revenue last year. Zuckerberg must personally certify Facebook’s compliance with its privacy programs. The FTC says false certifications could expose him to civil or criminal penalties. Some experts thought the FTC might fine Zuckerberg directly or limit his authority over the company. The commission opened their investigation after revelations that data-mining firm Cambridge Analytica had gathered details on as many as 87 million Facebook users without their permission.