The arguments laid out by Facebook lawyers in a Feb. 28 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 staffers 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 people familiar with the matter. It is not clear whether the agency presented that amount to Facebook before the company’s February 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 Constitution and the FTC’s 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 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 that it was “highly unlikely the Commission could have obtained this magnitude of injunctive relief if we had proceeded with litigation.”
“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 that the settlement included “significant accountability and oversight measures.”
The FTC declined to comment.
Central to Facebook’s analysis was that consumers were not harmed — that they did not 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 “substantially lower” than the maximum allowed under law. Facebook also argued that it “did not profit from alleged violations” of its users’ privacy.
In doing so, Facebook lawyers sought to use the FTC’s 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 were tracked on the Web. When privacy advocates challenged the settlement in court as 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 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.”