Facebook has received its first real blow following its user privacy malpractices, but many believe the FTC's punishment is negligible.
It’s hard to forget that awkward hearing with Facebook CEO Mark Zuckerberg last year, where he tried to address Congress’ head-scratching questions. The hearing was held in the wake of the Cambridge Analytica scandal. For a company that possibly felt untouchable for so long, it now found itself in the hot seat. The US, and the world, have had their eyes on Facebook’s law-skirting privacy practices.
Now, the axe has dropped, and Facebook is beginning to feel the wrath of legislators where it should hurt - its pockets.
"Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers' choices," said FTC (Federal Trade Commission) chairman Joe Simons.
Now, Facebook faces a $5 billion fine, the largest a company has ever received for violating consumers’ privacy, and almost 20 times greater than the largest privacy or data security penalty ever imposed worldwide.
According to the FTC, “the settlement order also imposes unprecedented new restrictions on Facebook’s business operations and creates multiple channels of compliance. The order requires Facebook to restructure its approach to privacy from the corporate board-level down, and establishes strong new mechanisms to ensure that Facebook executives are accountable for the decisions they make about privacy, and that those decisions are subject to meaningful oversight.”
“The magnitude of the $5 billion penalty and sweeping conduct relief are unprecedented in the history of the FTC,” Sadi Simons. “The relief is designed not only to punish future violations but, more importantly, to change Facebook’s entire privacy culture to decrease the likelihood of continued violations. The Commission takes consumer privacy seriously, and will enforce FTC orders to the fullest extent of the law.”
Some, however, believe Facebook got off lightly with the punishment, especially that the FTC “agreed the settlement would shield Facebook from known claims of violations before June 12, 2019, essentially giving the company a pass on its past,” as per The New York Times (TNYT). “And it provided immunity to Facebook officers and directors.”
The Times reported that Rohit Chopra, a Democratic commissioner, warned that the terms of the settlement shielded Facebook from a wide range of problematic practices. “This shield represents a major win for Facebook, but leaves the public in the dark as to how the company violated the law and what violations, if any, are going unaddressed,” he said.
Consider that for a company that is worth $585 billion, $5 billion won’t exactly dent their cash flows. CNN notes that this sum is what Facebook makes in a month. Their revenue last year was $55 billion.
The New York Times’ Mike Isaac even notes that Facebook stock surged following the announcement, reflecting investor faith in the company given all that’s transpiring.
Facebook’s customers, too, don’t seem to be bothered with the ongoing privacy concerns, with the BBC reporting that the company’s “financial results reported on Wednesday did not reflect any move by customers to shun the network over privacy concerns. It said monthly active users had risen 8% in the second quarter. Revenues, mainly advertising sales, rose by 28%, beating analysts' forecasts.”
So while it might seem that the FTC is punishing Facebook, some believe that this is simply a slap on the wrist for the social media giant.