Mark Zuckerberg is facing a historic threat to his power as part of a $3 billion Facebook privacy settlement

Mark Zuckerberg.JPGFacebook CEO Mark Zuckerberg.Reuters

  • Mark Zuckerberg's power at Facebook is facing an unprecedented threat from the Federal Trade Commission.
  • The FTC's investigation into the Cambridge Analytica data breach is coming to a head, and Politico and The New York Times report that it wants to impose new privacy safeguards on Facebook.
  • These could include forcing Facebook to hire an FTC-approved privacy assessor and creating an independent committee to keep the company in check.
  • Zuckerberg has historically bristled at the idea of independent oversight.
  • Visit BusinessInsider.com for more stories.

Facebook boss Mark Zuckerberg is under siege after a punishing year for his social network.

Zuckerberg's power at Facebook is all-encompassing. He is the CEO, chairman, and controlling shareholder. But his authority is being interrogated like never before as part of a huge legal settlement, according to Politico and The New York Times.

The Federal Trade Commission has been investigating the giant Cambridge Analytica scandal, during which the personal information of 87 million Facebook users was weaponised in the 2016 presidential election.

The FTC's work is coming to a head: Facebook revealed last week in its first-quarter earnings that it has set aside $3 billion to settle the probe into its data handling practices.

Now, Politico and The New York Times report that there will be other strings attached. According to the stories, Facebook and the FTC are discussing a number of new privacy safeguards. These include:

  • Facebook appointing an FTC-approved privacy official, a source told Politico. This "assessor" will monitor whether it is complying with the FTC settlement and acting in the best interests of users, the Times added.
  • Creating an "independent" privacy oversight committee to keep Facebook in check. This could be made up of Facebook board members and other experts, according to the reports. It will meet quarterly, sources added.
  • Appointing Zuckerberg or another Facebook executive as a "compliance" officer. Theoretically, this would make them personally accountable for any future data breaches.

The cumulative effect of these measures would be one of the biggest erosions of Zuckerberg's authority in Facebook's history. He would have independent experts looking over his shoulder, checking his homework, holding him accountable for mistakes, and making sure users are being protected. Some of those experts would report to the federal government.

Read more: Facebook's activist shareholders are making another dramatic bid to oust Mark Zuckerberg and abolish the firm's share structure

Zuckerberg has historically bristled at the idea of independent oversight. Activist shareholders have tried to force Facebook into appointing an independent chairman, but the firm has strongly rejected the idea and voted it down.

Unhappy investors will make another attempt to oust Zuckerberg as chairman at Facebook's annual shareholder meeting on May 30. They also want to rip up the firm's share structure to dilute his voting power. Facebook is again kicking against the plan, saying an independent chair would "cause inefficiency in board and management function and relations."

The investors are likely to fail with their proposals, given Zuckerberg has more than half of the voting power. But the FTC may succeed in bringing some of the independent oversight they crave. In doing so, they can loosen Zuckerberg's stranglehold on the firm he founded in his Harvard dorm room.

Facebook declined to comment when reached by Business Insider. Zuckerberg has repeatedly stated that the company needs to up its privacy game, and revealed his new mantra this week: "The future is private." This is a nod to his vision to supercharge private messaging and roll out end-to-end encryption.

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