Even when Facebook loses cash, it earns cash.
The Federal Trade Commission last week determined to impose a roughly $5 billion fine on Facebook as a part of a settlement in a long-running probe into whether or not the social media giant’s infamous Cambridge Analytica scandal desecrated a 2012 consent degree in which Facebook agreed to better defend user privacy.
The fine, which has been referred to the Justice Department’s civil division for review, would be the biggest ever handed out to a tech company by the federal government. However if Facebook’s recent stock price is something to go by, the corporate isn’t in the least fussed by the fine.
As Business Insider reported this week, when news of the fine spread last Friday, Facebook’s stock price actually raised by 1 chronicles, netting chief executive officer Mark Zuckerberg — who owns 88.1% of all Facebook shares — an additional $1.1 billion dollars. In April, Facebook had also reportedly set aside $5 billion in anticipation of a decision by the Federal Trade Commission, further dampening any kind of impact the fine might have hoped to have.
Lawmakers fiercely criticized the Facebook settlement, which was passed 3-2 along party lines by the Republican-controlled Federal Trade Commission. “The Federal Trade Commission simply gave Facebook a Christmas present 5months early,” Rep. David Cicilline (D-RI) said in a statement. “It’s terribly disappointing that such a tremendously powerful company that engaged in such serious misconduct is obtaining a slap on the wrist.”
“Given the magnitude of the Cambridge Analytica violation, the FTC not solely needs to impose a more significant fine, they have to be clear regarding what Facebook must change once it involves information practices,” said Sen. Amy Klobuchar, (D-MN) who previously co-introduced legislation to enhance the transparency of political ads on Facebook. “It seems that they haven’t done that, which is why Congress must take action.”
In addition, Sens. Ed Markey (D-MA), Richard Blumenthal (D-CT), and Josh Hawley (R-MO) all wrote to the Federal Trade Commission on Tuesday, describing the fine as “woefully inadequate,” and asking for a proof of the process by which the commission determined the scale of the fine, as well as if it had interviewed Zuckerberg or other top-level Facebook executives before deciding on its settlement.
Regardless of the intricacies of the settlement, the reaction of Facebook to what was presupposed to be a record-breaking federal fine shows not solely the obvious financial power of the social media behemoth, however also how ill-equipped U.S. regulators presently are to level out significant, impactful punishments to such corporations.
If regulators want inspiration, they may do well to appear to the European Union’s General data Protection Regulation (GDPR). The framework, which was introduced in the spring of 2018, is meant to allow EU citizens higher management of their information and better hold companies which misuse that data to account.
Crucially, the GDPR permits for a maximum fine equivalent to 4-dimensional of the company’s world revenue. These penalties, in turn, might probably make the FTC’s “record-breaking” fine of $5 billion much more common for Facebook.