Displaying items by tag: fine
Facebook faces historic $5bn fine over privacy violations
The US Federal Trade Commission (FTC) has decided to fine Facebook $5 billion over privacy violations from the Cambridge Analytica scandal as well as a $100 million penalty by the US Securities and Exchange Commission (SEC) for releasing misleading information about user data.
Notwithstanding the highest ever fine imposed on the tech giant, the FTC said that Facebook will also have to submit new sweeping restrictions and a newly modified corporate structure which aims to hold the company accountable for their decision regarding the privacy of its users.
The FTC issued a new 20-year settlement in an effort to avoid another potential situation where Facebook deceives its users about their privacy. The settlement order will reform the way the company makes its decisions about privacy through encouraging greater transparency and holding the tech behemoth responsible through several levels and channels of compliance.
Facebook CEO, Mark Zuckerberg, stated, “The next focus for our company is to build privacy protections as strong as the best services we provide. I’m committed to doing this well and delivering the best private social platform for our community.”
The $5 billion fine accounts for around 9% of the tech company’s 2018 revenue.
In fact, the decisions came amidst Facebook’s announcement of its second quarter earnings. The company’s stock experienced a 2% decrease during this quarter in the pre-market trading.
After the fines were made official, Zuckerberg said, “Just as we have an audit committee of our board to oversee our financial controls, we’ll set up a new privacy committee of our board that will oversee our privacy program. We’ve also asked one of our most experienced product leaders to take on the role of Chief Privacy Officer for Products.”
Google charged $1.69bn for anti-trust breach by EU
US tech giant Google has appealed an EU fine of 1.49 billion euros ($1.69 billion) for unfair practices through misuse of its dominant position, a source close to the case said.
Tech giant incurs GDPR fine applied by EU country for the first time
France's data watchdog (CNIL) announced a fine of 50 million euros ($57 million) for US search giant Google, using the EU's strict General Data Protection Regulation (GDPR) for the first time.
Google was handed the record fine from the CNIL regulator for failing to provide transparent and easily accessible information on its data consent policies, a statement said. The CNIL said Google made it too difficult for users to understand and manage preferences on how their personal information is used, in particular with regards to targeted advertising.
“People expect high standards of transparency and control from us. We're deeply committed to meeting those expectations and the consent requirements of the GDPR,” a Google spokesperson said in a statement. “We're studying the decision to determine our next steps.”
The ruling follows complaints lodged by two advocacy groups last May, shortly after the landmark GDPR directive came into effect. One was filed on behalf of some 10,000 signatories by France's Quadrature du Net group, while the other was by None Of Your Business, created by the Austrian privacy activist Max Schrems.
Schrems had accused Google of securing “forced consent” through the use of pop-up boxes online or on its apps which imply that its services will not be available unless people accept its conditions of use.
“Also, the information provided is not sufficiently clear for the user to understand the legal basis for targeted advertising is consent, and not Google's legitimate business interests,” the CNIL said.
ZTE’s share price nosedives as it resumes trading
Chinese telecommunications behemoth ZTE has seen its share price plummet by a whopping 39% following the resumption of its trading on the Hong Kong stock exchange. The Chinese vendor was able to resume trading after it reached a resolution agreement with the United States.
ZTE looked set to go out of business following the decision by the US Commerce Department to prohibit American companies from selling crucial hardware and software components to it for a period of seven years.
US officials implemented the ban after it claimed ZTE had failed to make the changes to its Board of Directors after being found guilty of trade violations with Iran and North Korea in 2016. However, following protracted negotiations between Beijing and Washington a settlement deal was finally reached which allowed ZTE to resume business in the United States.
The telecommunications colossus may have been saved but that didn’t stop its share price from nosediving by 39.22 to HK$15.56 during Hong Kong morning trade - while it also plunged by its 10 percent daily limit to 28.18 yuan in Shenzhen.
Fiscal analysts have predicted that whilst the nightmare for ZTE may be over with the US, the company will have to deal with the consequences of that saga for a significant period of time.
Analysts Edison Lee and Timothy Chau said, “While the nightmare is now over, ZTE will likely have to deal with many changes. We expect significant near-term selling pressure and a volatile stock price."
The ZTE crisis was a major issue during trade talks between the US and China, and the Trump administration were able to use that as leverage in the discussions. The ZTE settlement came just days after Beijing offered to increase purchases of US goods by $70bn in an effort to cut the yawning trade imbalance with the US.
It has been reported that Trump has demanded a $200 billion reduction in its trade deficit with China over two years.
“The US agreement with ZTE with fine and change of management, in other words, is a political deal," said analyst Dickie Wong at Kingston Securities. "If the US didn't 'free' ZTE in this way, US companies would find it very difficult in any moves in China, including decisions on mergers and acquisitions," Wong added.
ZTE agree deal with US on trade sanctions
Chinese telecommunications vendor ZTE has announced that it has reached a deal with the US Commerce Department over the trade sanctions that threatened to put the powerful conglomerate out of business.
ZTE has vowed to clean up its act in light of the decision by the US after weeks of protracted talks between officials in Beijing and Washington. In April, the US Commerce Department prohibited the sale of crucial US components to ZTE for a period of seven years. It had found that the Chinese telecommunications colossus had failed to take the appropriate actions against its staff in relation to the trade violation it engaged in with Iran and North Korea.
ZTE chairman Yin Yimin said the company had to start holding the relevant people to account for the trade violations in 2016, and said the ban imposed in April highlighted the issues within its internal management systems.
In a statement released to Bloomberg, the chairman said, “We must deeply realize that this issue in essence mirrored problems in our compliance culture and management. We should hold relevant people accountable and avoid similar issues in the future."
It has been disclosed that part of the deal agreed between the US and ZTE will see the Chinese vendor pay a $1bn penalty, with another $400m in escrow to cover possible future violations. In addition to this, ZTE will also be forced to overhaul its entire board of directors and must hire outside legal compliance specialists who will in turn report directly to the Commerce Department for 10 years.
Once ZTE has executed these changes Washington will strike the company from a sanctions list. China's foreign ministry on Friday offered a muted response to the ZTE deal, but a spokeswoman added the following statement, "We also hope the US can provide a fair, equal and friendly atmosphere for Chinese enterprises' investments and operations there.”
ZTE forecasts loss of $343m in 2016 - following settlement with US government
ZTE has suffered fresh woe just hours after it disclosed details of its settlement with the US government in which it was found guilty of breaching US export control rules in North Korea and Iran from 2010 - 2016. The Chinese vendor released its forecasted loss for 2016 - and it makes grim reading for stakeholders - ZTE have forecast a loss of $343m for 2016.
The latest financial announcement comes hot on the heels of US Justice, Commerce and Treasury department imposing a whopping fine of $892m on ZTE - with a further $300m suspended for seven years. That projected loss reflects the financial provision the company made against the $892m penalty payable as part of the settlement of the US case. It has since emerged that without that financial provision, the Chinese telecommunications colossus would have reported a net profit of CNY3.83 billion in 2016 - which would have represented a 19% increase from results in 2015.
ZTE had issued a warning almost a month ago in relation to the outcome of the US trade sanctions and what impact they would have on its financial results - and they indicated that a settlement would subsequently result in a heavy fine.
For the first quarter of 2017, ZTE expects its net profit to be between CNY1.15 billion and CNY1.25 billion, an increase of between 21 per cent and 31.7 per cent from a year earlier. Revenue is forecast to increase between 10 per cent and 20 per cent from a year earlier, driven by higher revenue in its carrier networks and consumer businesses, the company said in a statement.
CEO Zhao Xianming said that coupled with recent efforts to streamline operations and its leadership around 5G, "ZTE will be well-positioned for positive overall performance. The company anticipates continued growth and business expansion over the next several years as we continue to work with our partners around the world."
MTN to pay $1.7 billion Nigeria telecoms fine
MTN said it would pay a $1.7 billion fine to the Nigerian government in a "full and final settlement" over its failure to disconnect unregistered mobile phone users.
The Johannesburg-based company said in a statement that "MTN Nigeria has agreed to pay a total cash amount of Naira 330 billion over three years."
Africa's biggest mobile-phone operator was fined $3.9 billion last year and has since been in negotiations with the Nigerian government to reduce the size of the penalty. The company was hit with the huge demand amid fears that some of the 5.1 million affected lines were being used by Boko Haram insurgents.
A Nigerian government spokesman said that he could not confirm the agreement as parliament was still investigating the matter. "The point should be made that MTN cannot singularly decide on what to pay," communications ministry spokesman Victor Oluwadamilare said. "As far as Nigeria is concerned, we have to await the outcome of that intervention by the national assembly."
After MTN's announcement, its shares on the Johannesburg Stock Exchange rose as much as 21 percent, on track for the biggest gain since 2008, according to Bloomberg News.
The Nigerian Communications Commission (NCC), the country's telecoms regulator, handed down the fine last year citing an inability to trace users in a country plagued by frequent kidnappings and Boko Haram militants. The sum was originally set at $5.2 billion before being lowered to $3.9 billion on appeal.
"MTN is pleased to inform shareholders that the matter has been resolved with the Federal Government of Nigeria," the company statement said. MTN executive chairman Phuthuma Nhleko "expresses his thanks and gratitude to the Nigerian government for the spirit in which the matter was resolved."
MTN paid one installment in February and has scheduled six other payments to cover the fine by May 2019. "The news is a huge relief to investors, given the fact that Nigeria ended up not imposing the initial amount of the fine," Dobek Pater, telecoms specialist at the Africa Analysis consultancy said.
"MTN could not afford to lose a major market such as Nigeria and by paying the fine it shows that they still have faith in keeping their investment there."
The MTN fine dominated South Africa's President Jacob Zuma visit to Nigeria earlier this year. Relations between the continent's two economic powerhouses have been strained over recent years on issues including economic rivalry and political friction.