Facebook reaches US$5 billion settlement over Cambridge Analytica scandal

hares of Facebook rose on Friday after the news and closed up 1.8 percent. Photo credit: Getty

The US Federal Trade Commission (FTC) has approved a roughly US$5 billion settlement with Facebook this week over its investigation into the social media company's handling of user data, the Wall Street Journal reports.

The FTC has been investigating allegations 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 on Friday after the news and closed up 1.8 percent.

Facebook earlier this year said it had set aside US$3 billion to pay for what it said it expected to be a US$3 billion to US$5 billion penalty.

A settlement is expected to include other government restrictions on how Facebook treats user privacy, WSJ reported.

Representative David Cicilline, a Democrat and chair of a congressional antitrust panel, called the US$5 billion penalty "a Christmas present five months early".

"This fine is a fraction of Facebook's annual revenue. It won't make them think twice about their responsibility to protect user data," he said.

Facebook's revenue for the first quarter of this year was US$15.1 billion while its net income was US$2.43 billion. 

FTC and Facebook declined Reuters requests for comment.