The US Federal Trade Commission (FTC) has slapped a US$5 billion fine on Facebook. it is the largest fine ever imposed on any company, anywhere, anytime. But to Facebook, the fine is just petty cash – less than 9% of last year’s revenue.
In anticipation of the fine Facebook took a one-time balance sheet charge of $3 billion from last year’s revenue. Now that the matter is over its shares soared – go figure. And it hardly makes a dent in Zuckerberg’s $75 billion personal worth!
It is not clear if Facebook will appeal the fine, but commentators suggest it knows it got off lightly. Facebook has already said, “At no point did Mark or any other Facebook employees knowingly violate the company’s obligations under the FTC consent order.” Mark probably would not look too bad in prison grey!
Despite the mammoth fine, many sectors are not happy with the
FTC’s light slap on the wrist.
Democratic Sen. Mark Warner said,
“Given Facebook’s repeated privacy violations, fundamental structural reforms are required. With the FTC either unable or unwilling to put in place reasonable guardrails to ensure the protection of privacy and data, it’s time for Congress to act.”
And Congress likely will.
In a bipartisan move, Republican Congressman David Cicilline
“The settlement is a slap on the wrist. This fine is a fraction of Facebook’s annual revenue. It won’t make them think twice about their responsibility to protect user data.”
It is not over yet!
The fine was for one transgression – Cambridge Analytica,
and it is from the US FTC. Cambridge Analytica was a turning point in terms of
people understanding the business model around monetisation of their personal
Now that the precedent has been set for other ongoing privacy investigations from
The European Union (about GDPR breaches) with a
potential fine of 4% revenue (capped at 20 million euros)
The EU has more than a dozen separate investigations
into Facebook and its companies – WhatsApp, Instagram, Messenger etc
The UK levied the maximum permissible fine of
500,000 pounds over the Cambridge Analytica scandal and has smelt blood looking
at wider fines
The Belgian and German privacy bodies are investigating
Facebook data collection practices
An Irish Data Protection Commission (DPC) investigation
about a breach of “hundreds of millions” of Facebook and Instagram user
passwords stored in plaintext on its servers
Office of the Privacy Commissioner of Canada will
take Facebook to federal court to force the company to correct its “serious
contraventions” of Canadian privacy law for over 600,000 of its citizens
New York attorney general Letitia James is
looking into the recent “unauthorised collection” of 1.5 million user email
addresses, which Facebook used for profile verification, but inadvertently also
scraped their contact (friends) lists.
And unrelated to privacy is
The publication of terror and hate videos/messages that could lead to an unworkable restriction on its posts
Anti-discrimination, equal opportunity and human rights legislation as Facebook allows demographic and other profiling that can exclude ‘groups’ with razor-like precision from receiving advertisements (US Department of Housing and Urban Development but many are on that bandwagon).
A US House Judiciary Committee is probing competition in digital markets as part of an investigation with both Republicans and Democrats expressing bipartisan concern about the power exercised by FAANG (US Anti-trust issues) and is closely being looked at by the EU as well
The FBI has an ongoing investigation that may be related to the Securities Exchange Commission investigations
Australia has an ongoing investigation into the undue influence of digital platforms
Then there is US Presidential candidate Elizabeth Warren that FAANG (Facebook, Amazon, Apple, Netflix and Google – an acronym for all Big Tech) must be broken up. GadgetGuy has US expert Sam Bocetta’s take here.
And that is the tip of the iceberg. Most cases address similar
issues – privacy or monopoly power.
Potential Bottom line for Facebook
More huge fines coming from a raft of global authorities over privacy issues
Potential jail time for Facebook senior management
Increasing #DeleteFacebook pressure
Revelations that a huge percentage of Facebooks 2.4 billion users are fake are proven true
More damaging evidence that questions the integrity and trustworthiness of Facebook and by inference Big Tech
More legislation that could severely restrict Facebook’s business model – the product is you
Increasing blacklisting by advertisers that want to avoid a Titanic moment