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.