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Facebook fined record $5b over privacy

Shares of Facebook rose on Friday after the news and closed up 1.8 per cent. Source: AAP

Federal regulators are fining Facebook $US5 billion for privacy violations and instituting new oversight and restrictions on its business.

Facebook will pay a record $US5 billion ($A7.2 billion) fine to resolve a government probe into its privacy practices and will boost safeguards on user data, the US Federal Trade Commission and the social media company said.

After the stock market closed, Facebook disclosed as a part of its earnings report that the FTC told it last month the commission had opened a separate antitrust investigation of the company.

The FTC, which early on Wednesday issued a statement and held a news conference about the privacy settlement, did not mention an antitrust probe.

Facebook CEO Mark Zuckerberg.
Facebook CEO Mark Zuckerberg.
AAP

The FTC probe that resulted in the $US5 billion settlement uncovered a wide range of privacy issues. It was triggered last year by allegations Facebook inappropriately shared information belonging to 87 million users with the now-defunct British political consulting firm Cambridge Analytica.

The consultancy's clients included President Donald Trump's 2016 election campaign.

The FTC voted 3-2 to adopt the settlement, which the three Republican commissioners called the settlement "a complete home run" that exceeded any possible court award.

Both Democratic commissioners said it did not go far enough or require a large enough fine. The settlement requires court approval.

Republican FTC chairman Joe Simons stressed the FTC's limited authority and desire to avoid a long legal fight.

Facebook said the settlement would provide "a comprehensive new framework for protecting people's privacy". Its shares closed about one per cent higher.

The Securities and Exchange Commission said Facebook agreed to pay an additional $US100 million to settle allegations it misled investors about the seriousness of its misuse of users' data.

Under the settlement, Facebook's board will create an independent privacy committee that removes "unfettered control by Facebook CEO Mark Zuckerberg over decisions affecting user privacy".

Facebook also agreed to exercise greater oversight over third-party apps and said it was ending access to friend data for Microsoft and Sony.

It is also barred from asking for email passwords to other services when consumers sign up and barred from using telephone numbers for advertising if they are obtained in a security feature such as two-factor authentication. The company must also get user consent to use facial recognition data.

Facebook said it may find additional problems as it initiates a review of its systems and warned it would take longer to roll out updates.

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