Facebook initially mounted an aggressive legal offensive against federal regulators who sought to fine the tech giant billions of dollars for its privacy abuses, arguing in newly revealed documents that the company didn’t harm consumers or profit from mishandling users’ data -and that it would have prevailed in court if it came to that.
The arguments laid out by Facebook lawyers in a February 28, 2019 white paper – obtained by The Washington Post through a federal open-records request – shed new light on the tech giant’s bare-knuckle, behind-the-scenes efforts at times to spare itself from the toughest punishments by the Federal Trade Commission. The case resulted in a record-breaking settlement that some critics still decried as too weak.
The FTC’s investigation stemmed from Facebook’s entanglement with Cambridge Analytica, a political consultancy that improperly accessed tens of millions of Facebook users’ personal information. The incident, along with Facebook’s other data mishaps, led FTC lawyers to conclude that the tech giant had violated a prior government order to improve its privacy practices. That opened the door for the agency to seek civil penalties.
Initially, FTC staff computed that Facebook’s misdeeds could result in a fine into the tens of billions of dollars, the Post first reported this summer, citing multiple sources familiar with the matter. It is not clear if the agency presented that amount to Facebook prior to the company’s February 2019 white paper; key numbers were redacted from the copy given to The Post. But the document still included a fiery response from Facebook, which called the FTC’s proposed fine “excessive, arbitrary, and capricious” and said it violated the U.S. constitution and the FTC’s own governing laws.
The “proposed penalty is unconstitutional, unlawful and unsupported by the allegations in the draft complaint,” lawyers wrote. “No court would entertain such a penalty, and neither will Facebook.”
The legal jostling between Facebook and the FTC illustrates the precarious decision that government regulators ultimately would have to make: try to fight the tech giant in federal court, embarking on a lengthy, painful legal battle, or settle with the company and obtain whatever relief Facebook was willing to stomach.
Ultimately, the agency led by Republican Chairman Joe Simons chose the latter option. The resulting $5 billion civil penalty against Facebook set a record for a federal privacy fine. The agency also forced Facebook to submit to unprecedented federal oversight. Announcing the agreement in July, Simons and his Republican colleagues said in a statement it is “highly unlikely the Commission could have obtained this magnitude of injunctive relief if we had proceeded with litigation.”
But the penalties proved insufficient for many privacy advocates, including the FTC’s two Democratic members as well as congressional lawmakers from both parties. Critics said the fine should have been higher and the punishments tougher – and some said a court fight may have been necessary to result in full relief for consumers.
“The fine we paid is unprecedented. It’s the largest fine in the history of the Federal Trade Commission and exceeds what the FTC would have been able to obtain in court, as experts have said,” company spokeswoman Monique Hall said Monday in a statement, adding the settlement includes “significant accountability and oversight measures.”
The FTC did not respond to a request for comment.
Central to Facebook’s analysis was that consumers weren’t harmed – that they didn’t suffer personal injury, such as a loss of money, from the company’s mishandling of their personal information. As a result, Facebook said legal precedent warranted a civil penalty that’s “substantially lower” than the maximum allowed under law. They also argued that Facebook “did not profit from alleged violations” of its users’ privacy.
In doing so, Facebook lawyers sought to use the FTC’s own, past words against it, pointing to the commission’s prior record for a privacy fine – a $22.5 million penalty levied against Google in 2012.
The FTC at the time faulted Google for misrepresenting users’ ability to control when they’re tracked on the web. When privacy advocates challenged the settlement in court for being too weak, federal regulators said their work was “sufficient” to protect consumers and would send a message to the tech industry. Years later, Facebook said its wrongdoing was “comparable,” justifying a similar punishment for its own mishaps.
Privacy groups also have challenged the FTC’s settlement with Facebook, which is pending approval by a federal judge. The Electronic Privacy Information Center filed a motion in court earlier this year arguing the deal “fails to safeguard the interests of Facebook users.”