By Spencer Feingold
Facebook is close to reaching an agreement with federal regulators that could put the social media giant under 20 years of government oversight, Reuters reported this week citing anonymous sources.
“It means they are going to be more closely watched by the government,” Gene Munster, the managing director of the venture capital firm Loup Ventures, told Cheddar in an interview Tuesday.
“At the most basic level, it means they’re going to have more red tape to operating their business,” Munster added. “At the most significant level, the company may need to change the terms of how they collect and share data with potential advertisers.”
The new deal with the Federal Trade Commission comes after the government launched multiple investigations into Facebook’s ($FB) handling of personal data and breaches of privacy, which violated federal law. Reuters reported that the deal could be announced within a month.
“The previous oversight did not yield what regulators had hoped, which is a more friendly Facebook,” Munster said. “In fact, Facebook had regressed and gone against some of those original policies.”
A deal with the government was speculated to be approaching following Facebook’s announcement in its first quarter earnings that the company had set aside $3 billion to pay federal penalties.
Munster added that the oversight mandated in the new deal could potentially force the company to change how it monetizes its platform.