Federal investigation of Facebook could hold Mark Zuckerberg accountable on privacy, sources say
Federal investigation of Facebook could hold Mark Zuckerberg
accountable on privacy, sources say
Federal regulators investigating Facebook for
mishandling its users’ personal information have set their sights on the
company’s chief executive, Mark Zuckerberg, exploring his past statements on
privacy and weighing whether to seek new, heightened oversight of his
leadership.
The discussions about how to hold Zuckerberg
accountable for Facebook’s data lapses have come in the context of wide-ranging
talks between the Federal Trade Commission and Facebook that could settle the
government’s more than year-old probe, according to two people familiar with
the discussions. Both requested anonymity because the FTC’s inquiry is
confidential under law.
Such a move could create new legal, political
and public-relations headaches for one of Silicon Valley’s best known — and
image conscious — corporate leaders. Zuckerberg is Facebook’s co-founder, chief
executive, board chairman and most powerful stock owner, and a sanction from
the federal government would be seen as a rare rebuke to him and the tech
giant’s historic “move fast and break things” ethos.
Often, the FTC does not
target executives in cases where it finds a company’s business practices have
violated web users’ privacy. But critics said that targeting Zuckerberg could send a message to
other tech giants that the agency is willing to hold top
executives directly accountable for their firms’ repeated data misdeeds.
“The days of pretending this is an innocent
platform are over, and citing Mark in a large scale enforcement action would
drive that home in spades,” said Roger McNamee, an early investor in the
company and one of Zuckerberg's foremost critics.
In
past investigations of Facebook, the U.S. government opted to spare Zuckerberg
from the most onerous scrutiny. Documents obtained from the FTC under federal
open-records rules reflect that the agency considered, then backed down, from
putting Zuckerberg directly under order during its last settlement with
Facebook in 2011. Had it done so, Zuckerberg could have faced fines for future
privacy violations.
Asked about the negotiations, Facebook said in a statement it “hope[s]
to reach an appropriate and fair resolution." The FTC declined to comment
for this story.
The
FTC began investigating
Facebook in March 2018 following reports that Cambridge
Analytica, a political consultancy, improperly accessed data on roughly 87
million of the social networking site’s users. The federal probe has focused on
whether Facebook violated an agreement, brokered with the FTC in 2011, that
required the company to improve its privacy practices. Since then, Facebook has
acknowledged a series of additional privacy lapses, including an admission
Thursday that it mishandled millions of users’ passwords on Instagram, its
photo-sharing service.
Appearing
before Congress last year, Zuckerberg sought to take personal responsibility
for a range of his company’s recent missteps, including Facebook’s entanglement
with Cambridge Analytica. “I started Facebook, I run it, and I’m responsible
for what happens here,” he told lawmakers.
But the Facebook chief still maintained that the company did not commit a
“violation of the consent decree” it had struck with the FTC.
Settling that federal inquiry, now more than a year old, could force
Facebook to make significant concessions, including paying a fine
ranging into the billions of dollars, the Post previously has
reported. It could result in new obligations targeting Zuckerberg, too. One
idea that has been raised could require him or other executives to certify the
company’s privacy practices periodically to the board of directors, two people
familiar with the matter said, along with heightened oversight by the FTC.
It is unclear if the FTC
and Facebook are still contemplating such a requirement, or if they’ve struck
an agreement on these or other outstanding matters. But Facebook has fought
fiercely to shield Zuckerberg as part of the negotiations, one of the sources
familiar with the probe said. Either Facebook or the FTC could choose to walk
away from talks, resulting in the matter heading to court.
The
idea of holding Zuckerberg accountable — and even subjecting him to penalties
for Facebook’s alleged mishandling of users’ data — has gained political
traction in Washington. On Thursday, Democratic Sen. Richard Blumenthal (Conn.)
said the company’s top executive “wasn’t just aware of Facebook’s invasion of
consumer privacy, he signed off on it and publicly downplayed legitimate
concerns.”
“Holding Mark Zuckerberg and other top Facebook executives personally
at fault and liable for further wrongdoing would send a powerful message to
business leaders across the country: You will pay a hefty price for skirting
the law and deceiving consumers,” Blumenthal said.
Some
of the FTC’s own decision makers also have aired their support for penalties
against executives when their companies are under investigation. In a May 2018 memo,
Democratic Commissioner Rohit Chopra said the agency “should hold individual
executives accountable for order violations in which they participated, even if
these individuals were not named in the original orders.” He didn’t mention
Facebook by name, and he did not respond to requests for comment.
Zuckerberg still could escape largely
unaffected as a result of negotiations with the FTC. If he does, it would not
be the first time. More than eight years ago, when the FTC cobbled together its
initial settlement with Facebook, agency staff weighed whether to target
Zuckerberg personally. An early, unreleased and undated draft of the FTC’s
consent order against Facebook, obtained by the Post through a Freedom of
Information Act request, explicitly named Zuckerberg as a respondent — meaning
he would have faced heightened federal oversight and the risk of fines and
other penalties in the event of future privacy missteps.
In the end, however, the FTC dropped mention of him from a version of
the order shared around April 2011, according to e-mail records obtained from
the agency under open-records laws. The agency also considered, then removed, a
provision from its early settlement that would have required Facebook to pay an
unspecified sum to the government, the records show. The form of punishment,
called disgorgement, requires a company to return ill-gotten monetary gains.
The draft consent decree included only an “xxx” instead of an exact amount, and
the language was ultimately removed by the time the FTC announced its agreement
with Facebook in November 2011.
This time, FTC veterans have encouraged
the agency to take direct aim at Zuckerberg, even putting him personally under
order and subjecting him to further federal oversight. David Vladeck, who
served as the director of the Bureau of Consumer Protection at the FTC in 2011,
criticized the company this week because it “did not take that first consent
decree seriously.”
"I would hope any future order names
Zuckerberg," he said, adding that doing so "ratchets pressure up on
the company to make the CEO responsible."
Brokered in 2011, the FTC’s consent decree with Facebook requires the
company to be more upfront with consumers about the data it collects and give
them permission before it overrides their existing privacy settings. Facebook
also is barred from misrepresenting what it does with users’ data, while
submitting to 20 years of privacy checkups.
Talks between Facebook and the FTC have
intensified in recent weeks, as the agency’s investigation passed its one-year
anniversary. Top Facebook officials, including General Counsel Colin Stretch,
met with individual Democratic and Republican commissioners in March, according
to two additional sources familiar with the agency’s work but not authorized to
discuss a private probe.
While
the FTC probes Facebook, a number of states’ attorneys
general have embarked on their own investigation. The attorney
general of the District of Columbia has filed a privacy
lawsuit against the company.
Other
agencies, including the
Securities and Exchange Commission, have investigated Facebook’s
relationship with Cambridge Analytica. And a federal grand jury in March sent
subpoenas to two tech companies with which Facebook struck data-sharing
agreements, the New York Times reported, noting that the target of such a
criminal probe remains unclear.
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