Facebook Set to Create Privacy Positions as Part of F.T.C. Settlement

WASHINGTON — The Federal Trade Commission is negotiating a settlement with Facebook that would create new positions at the company focused on strengthening its privacy practices, according to two people with knowledge of the talks.

Facebook has agreed to create a privacy committee to protect its users’ data, as well as an external assessor who would be appointed by the company and F.T.C., said the people, who declined to be named because they were not authorized to speak publicly. The social network will also appoint a head compliance officer — who could be its chief executive, Mark Zuckerberg — to oversee privacy efforts, one of the people said.

The proposed commitments are part of negotiations between the agency and Facebook to settle privacy violations. Both have been talking for months over claims that Facebook violated a 2011 privacy consent decree. Last week, Facebook announced that it expected to be fined up to $5 billion by the agency, in what would be a record financial penalty by the United States against a technology company.

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A Facebook spokeswoman and an F.T.C. spokesman declined to comment. The settlement details were earlier reported by Politico.

The settlement talks are being watched as a potential blueprint for privacy in the United States at a time of fierce criticism over the competition, labor and privacy policies of big tech companies like Google, Amazon, Facebook and Twitter. The agency has been widely criticized in the past for limited oversight of the companies. Officials elsewhere, particularly in Europe, have been more aggressive.

The case against Facebook is also being watched as a measure of the Trump administration’s willingness to regulate American companies. The White House has rolled back rules for many industries, but President Trump has been critical of tech companies, arguing that they have too much power.

No company has been more under the glare of regulators than Facebook, which the F.T.C. began investigating 13 months ago after revelations the company allowed user data to be turned into political profiles by Cambridge Analytica, a political consulting firmed used by Mr. Trump.

Privacy advocates and Democratic lawmakers have pushed for more aggressive changes at Facebook, including higher fines and holding Mr. Zuckerberg personally liable for the company’s privacy violations related to the investigation.

“Any settlement with Facebook must hold Mr. Zuckerberg individually accountable or his flagrant, repeated violations of Americans’ privacy will continue,” Senator Ron Wyden, a Democrat from Oregon, wrote in a letter to F.T.C. commissioners last week.

The company has strongly resisted naming Mr. Zuckerberg in the F.T.C.’s settlement as personally liable for privacy violations, according to the two people with knowledge of the talks.

The company has offered what it has described to the F.T.C. as a new corporate governance structure built around privacy, the people said. The promises include the creation of an independent committee, which could include members of Facebook’s board of directors, to oversee privacy policy. The committee would meet quarterly.

Facebook also agreed to the creation of a position for an independent assessor, the people said. The assessor would be appointed by the F.T.C. and the privacy committee. That person would determine whether the company is complying with a new F.T.C. privacy order as well as the company’s own privacy policy for users. The assessor would give biannual reports to the company and F.T.C.

The company would also designate a compliance officer internally at the executive ranks. There was discussion at one time that Mr. Zuckerberg could be given that role, but it is unclear if he would ultimately do so, according to one of the people familiar with the talks.

When the company announced putting aside the $5 billion to pay for potential penalties, it said that “the matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”

A $5 billion penalty would be far higher than the F.T.C.’s current record against a tech company. The agency fined Google $22.5 million in 2012 for misleading users about how some of its tools were tracking users.

But that amount would still be a small percentage of the company’s $56 billion in annual revenue. Despite all of the public scrutiny the company has faced in the past year, Facebook said last week that its revenue increased 26 percent in the first quarter, to $15 billion, from a year earlier.

Some privacy advocates have said that more meaningful action from the agency would require curbing Facebook’s ability to share data with business partners, requiring it to take more measures to inform consumers when and how it collected data, or other demands to change its operations. Those sort of requirements are not expected to be in the settlement, according to the people familiar with the talks.

Since the F.T.C.’s investigation, Mr. Zuckerberg has announced a focus toward privacy. On Wednesday, the company announced redesigns of Facebook’s apps to focus more on groups and private communications, a shift from its long push for more public posts.

The features “will end up creating a more trustworthy platform,” Mr. Zuckerberg said.

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