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FTC fines Facebook $5B, Mnuchin slams Amazon

It has been a tough day for tech giants Facebook and Amazon.

Facebook has agreed to pay an historic $5 billion settlement with the Federal Trade Commission (FTC) to resolve charges it violated the privacy rights of its users. In a post on Facebook, founder Mark Zuckerburg said the social media giant will also be making some “major structural change” as a result of the settlement. These will include bringing Facebook’s privacy controls more in line with its financial controls under federal Sarbanes-Oxley Act audit and compliance regulations, as well as creating a new privacy committee of its board and establishing the role of chief privacy officer for products.

“Going forward, when we ship a new feature that uses data, or modify an existing feature to use data in new ways, we’ll have to document any risks and the steps we're taking to mitigate them,” Zuckerburg said in the post. “We expect it will take hundreds of engineers and more than a thousand people across our company to do this important work. And we expect it will take longer to build new products following this process going forward.”

According to USA Today, the settlement requires Facebook to strengthen privacy protections across Instagram and WhatsApp as well as Facebook. Personal user information, such as phone numbers, must also be protected. Facebook separately agreed to pay $100 million to settle charges from the Securities and Exchange Commission (SEC) that it misused user data.

Separately, U.S. Treasury Secretary Steven Mnuchin stated Amazon has “destroyed the retail industry across the U.S.” in an interview with CNBC. Mnuchin said it is appropriate for Amazon to be included in an antitrust review of large technology companies launched by the U.S. Justice Department on Tuesday.

“People had those concerns about Walmart,” Mnuchin added. “Walmart developed a business where small business could continue to compete with them.”

In a statement released July 23, the Justice Department said, “(T)he department’s Antitrust Division is reviewing whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.”

The statement did not mention any potential targets of the investigation by name. However, representatives of Amazon, Apple, Facebook, and Google testified in a Washington, D.C., hearing held by the House Judiciary Committee’s antitrust panel on Tuesday, July 16. There have been increasing calls for the federal government to determine if major technology platforms enjoy an unfair advantage in e-commerce and consumer Internet usage.

In June, retailers including Walmart and Target signed a 10-page letter the Retail Industry Leaders Association (RILA) sent to the Federal Trade Commission (FTC) requesting the FTC ensure that new, technology-enabled retail business practices receive antitrust scrutiny – and action if necessary. The letter specifically cited Amazon and Google as potentially having excessive control of online product search and consumer data.

And in March 2019, presidential hopeful and Democratic senator from Massachusetts Elizabeth Warren publicly called for the federal government to break up the “monopolies” of Amazon, Google, and Facebook.
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