US regulators approve $5bn Facebook settlement

Facebook shares closed higher after the WSJ reported that regulators approved a major settlement over privacy issues.

Facebook $5bn
Shares of Facebook closed 1.8 percent higher after news broke about the settlement, for which Facebook said it had set aside $3bn to pay a penalty it expected to be between $3bn and $5bn [Dado Ruvic/Reuters]

The United States Federal Trade Commission (FTC) approved a roughly $5bn settlement with Facebook Inc this week over its investigation into the social media company’s handling of user data, a source familiar with the situation said on Friday.

The FTC has been investigating allegations that Facebook inappropriately shared information belonging to 87 million users with the now-defunct British political consulting firm Cambridge Analytica. The probe has focused on whether the sharing of data and other disputes violated a 2011 consent agreement between Facebook and the regulator.

Shares of Facebook rose after the news was reported by the Wall Street Journal (WSJ) earlier on Friday, and closed up 1.8 percent. Facebook earlier this year said it had set aside $3bn to pay for what it said it expected to be a $3bn to $5bn penalty.

The FTC and Facebook declined to comment.

The settlement still needs to be finalized by the US Department of Justice’s Civil Division, and a final announcement could come as early as next week, the source said.

The FTC is expected to include other government restrictions on how Facebook treats user privacy, the WSJ reported.

Source: Reuters