The US Federal Trades Commission (FTC) will impose a fine of $5 billion on Facebook for violating a decree governing privacy breaches, stemming from the Cambridge Analytics scandal, the Wall Street Journal reported. This is largest penalty the FTC has imposed against a technology company; its second largest fine was a mere $23 million on Google in 2012. Even so, the penalty will hardly make a dent in Facebook’s business — as many others have highlighted. Facebook made $15 billion in revenue and $2.4 billion in profits in just the first three months of 2019, and earned $22.1 billion in profits last year.
When news of the fine broke out, the company’s share price went up, leading some to say that the company was out of control.
— rat king (@MikeIsaac) July 12, 2019
This is presumably because in March 2019, Facebook had already told investors that it was expecting the penalty and had set aside $3 billion for it. As a result, the news of the fine didn’t surprise investors, and ironically, reaffirmed their faith in the company.
FTC’s fine faces criticism
The FTC began its investigation into Facebook in March 2018, responding to news reports that Cambridge Analytica had accessed personal data of 87 million Americans for possible violations of the 2011 consent decree the company had signed with the FTC.
Congressmen — both Republican and Democrat — have told the FTC that a $5 billion penalty was too little and that Mark Zuckerberg should personally be held responsible. “The FTC just gave Facebook a Christmas present five months early,” said Democrat Congressman David Ciciline. The amount won’t make Facebook think twice about their responsibility to protect user data. “If the FTC won’t protect consumers, Congress surely must” he said, echoing calls for deeper regulation of tech companies by lawmaking, instead of just via regulators.
“Given Facebook’s repeated privacy violations, it is clear that fundamental structural reforms are required,” said Democrat Senator Mark R. Warner. “With the FTC either unable or unwilling to put in place reasonable guardrails to ensure that user privacy and data are protected, it’s time for Congress to act.”