Big tech takes massive blows: $5B Facebook fine, DOJ antitrust probe

The U.S. government fined Facebook $5 billion for violating privacy and launched a separate antitrust probe of Big Tech. (Getty Images)

Big tech is under fire.

Facebook agreed to pay a $5 billion penalty on Wednesday for violating consumer privacy. That came one day after the U.S. Justice Department launched a broad antitrust review of Facebook, Google, Amazon, Apple, among others.

The Justice Department under Attorney General William Barr is set to take a far-reaching look into whether online platforms have stifled competition, according to the Wall Street Journal. The Federal Trade Commission had already created a task force in February to monitor competition in the tech sector.

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The Facebook fine involves a settlement with the FTC in which Facebook CEO Mark Zuckerberg will be required to certify quarterly that Facebook is in compliance with new privacy rules. The $5 billion is the largest penalty ever imposed on any company for violating consumer privacy and 20 times greater than the largest such penalty ever imposed globally, the FTC said in a release.

The two Democrats on the FTC in the minority said the penalty wasn’t enough, saying that it imposes no meaningful changes to the company’s structure. Members of the Republican majority, however, said Zuckerberg will face civil and criminal penalties if Facebook doesn’t comply with the agreed-upon privacy program. Members of Facebook’s board will monitor the privacy practices.

The FTC requirements on Facebook say the company must report within a month if data of more than 500 users has been compromised and what the company has done about it.

Other requirements call for Facebook not to use telephone numbers it obtained to enable security for advertising; not to ask consumers who sign up for services to provide email passwords to other services; and to increase oversight over third-party apps, including terminating developers that fail to certify they are in compliance with Facebook policies.

While the Facebook fine is steep, the Big Tech review by DOJ could be more damaging to tech companies writ large. “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” said Just Department antitrust chief Makan Delrahim in a statement. “The department’s antitrust review will explore these important issues.”

The antitrust review comes amid calls by some Democrats running for president to break up big companies like Google and Facebook. Meanwhile, President Trump has suggested that the U.S. should sue Google and Facebook. Much is unclear about how the probe will proceed, including whether information that DOJ gathers will be compelled with subpoenas.

RELATED: "Microsoft pushes for GDPR-like privacy rules in the U.S."

 

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