Meanwhile, Facebook is endowing a new institute devoted to the ethics of artificial intelligence at the Technical University of Munich in Germany.

(Bloomberg)—A U.S. privacy investigation of Facebook Inc., begun after a major data breach was exposed in March, is likely to result in a record fine against the company, according to a person familiar with the matter.

The Federal Trade Commission, the nation’s chief privacy watchdog, is weighing a penalty against the social-media giant for violating a 2011 settlement with the agency that required the company to take a series of steps to protect users’ personal information, said the person, who asked not to be named because the investigation is confidential. The probe may be months from completion, the person said.

The size of the Facebook fine couldn’t be learned. It’s also not clear whether the agency has settled on how much to seek from the Menlo Park, California-based company or whether it will also require changes to Facebook’s data collection and sharing practices.

Still, the likelihood of the penalty seems to indicate officials have determined there was a violation of the 2011 settlement. The agency opened it’s investigation after the disclosure that political consulting firm Cambridge Analytica gained access to information on about 70 million Facebook users in the U.S. The company has denied the incident was a violation.

FTC Chairman Joe Simons is under growing pressure to come down hard on Facebook after a series of data-privacy scandals at the company. The revelations have galvanized efforts in Washington to pass comprehensive legislation to better protect the personal information collected by the nation’s technology firms. Lawmakers and advocates have criticized the FTC for not doing enough to crack down on privacy violations even with its limited authority.


The agency’s previous record fine in a privacy action came in 2012, when Google paid $22.5 million for misrepresenting to users of the Safari internet browser that it wouldn’t place advertising trackers known as cookies on their computers. The amount was minuscule for Google, which reported net income of $10.7 billion that year.

The FTC and Facebook declined to comment about the investigation. The Washington Post reported earlier on the fine and said the agency’s five commissioners met recently to discuss it.

The former head of the FTC’s consumer protection division has said the fine could reach hundreds of millions of dollars. Bloomberg Intelligence estimates it could reach into the billions. The investigation is just one the social-media giant is facing in the U.S. The attorney general for the District of Columbia sued the company in December while other states have opened investigations. Facebook has said the Securities and Exchange Commission and the FBI are also investigating.


The FTC’s 2011 consent decree with Facebook settled claims that the company deceived consumers by telling them they could keep data private, but allowed it to be shared and made public.

The commission’s complaint included a litany of deceptive practices, such as allowing wider dissemination of profile information like photos, education and place of employment that a user had restricted to “Only Friends” or “Friends of Friends.” Facebook also promised users that it wouldn’t share personal information about them with advertisers when, in fact, the company identified to advertisers the users who clicked on their ads or to whom ads were targeted. Advertisers could then take steps to get detailed information about users, the FTC said.

Facebook funds ethics center in Germany

Meanwhile, Facebook recently announced it is endowing a new institute devoted to the ethics of artificial intelligence at the Technical University of Munich, in Germany.

The new center, which Facebook is funding with an initial grant of $7.5 million over five years, will investigate issues around AI safety, fairness, privacy and transparency, Joaquin Quinonero Candela, Facebook’s director of applied machine learning, said in a blog post.


Christoph Luetge, a TUM professor specializing in business ethics, will lead the new Institute for Ethics in Artificial Intelligence, Candela said.

Facebook has found itself increasingly embattled in the past two years, facing criticism for failing to stop the spread of fake news, terrorist propaganda and hate speech as well as abusing users’ privacy. CEO Mark Zuckerberg has told the U.S. Congress that the company will increasingly lean on AI to police content on the social network. The company has a large AI research lab that employs some of the world’s top experts in machine learning. But the use of AI can itself raise serious ethical concerns.

“At Facebook, ensuring responsible and thoughtful use of AI is foundational to everything we do—from the data labels we use, to the individual algorithms we build, to the systems they are a part of,” Candela said.

Sunday’s announcement marks the first time Facebook has funded an academic institute devoted to these issues. Previously, Facebook has joined the Partnership for AI, a consortium that includes a number of companies working at the cutting edge of AI technology and that aims to address ethical and safety concerns. It is also a founding member of AI4People, a European forum that brings together industry and government to investigate issues around the social impact of AI.

Candela said Facebook is also working on new tools, including one called Fairness Flow, that can help those working on machine-learning systems evaluate them for hidden bias.

He said Facebook chose TUM because it is “one of the top-ranked universities worldwide in the field of artificial intelligence.”

In the past, Facebook has faced particular criticism from German lawmakers for failing to police hate speech and misinformation and the company has responded, in part, by helping to fund German non-profits that work to combat rightwing propaganda.


While Facebook is providing the initial financing for the Institute, it will seek other funding partners too, according to the blog.