The Federal Trade Commission (FTC) is ready to settle Facebook’s privacy issues with a fine of $5 billion. That’s billion with a “B.”
Needless to say, it would be a record settlement. The previous record was a $22.5 million fine levied against Google.
The reported deal with Facebook would settle a number of alleged privacy violations, including the unauthorized use of Facebook data by Cambridge Analytica, to target political ads to Facebook users.
Complicating matters for Facebook is the fact that it previously settled privacy charges with the FTC and has been accused of being in breach of that consent decree, a charge it has denied.
But there is criticism of the settlement from some quarters for being too lenient. Several months ago, Facebook told investors it had set aside $3 billion to $5 billion to settle the government’s privacy case, evidence seen by some that the social media giant isn’t really being hurt.
Nilay Patel, editor-in-chief of the tech site The Verge, has called the record settlement “an embarrassing joke.” In an interview with NPR, Patel said Facebook settled a similar charge in 2011, paid the fine, but went about doing pretty much the same thing.
“If you look at the press release the FTC put out then, the first line is, Facebook said it was going to keep user information private and then repeatedly broke that promise,” Patel said in the interview. “So Facebook already had broken this rule, had already paid a fine to the FTC, had already promised it was going to do a better job and get user consent before sharing data. And here we are again. It's been a year and a half of scandals. And Facebook is going to pay this fine.”
‘Not that significant’
While it’s true that $5 billion is a record fine, Patel argues that it’s not that significant in Facebook’s case because the company can easily afford it. He claims Facebook pulls in that amount in a month or less. But in terms of profit, the fine is about 25 percent of Facebook’s earnings.
He also points to Facebook’s stock price action. When the story broke late Friday afternoon, about an hour before the market closed, Facebook surged on the New York Stock Exchange, with investors expressing relief that the case had been settled.
“I think it is pretty embarrassing for the United States government to levy a fine - the biggest fine by two orders of magnitude the FTC has ever levied - and for Mark Zuckerberg's net worth to go up,” Patel said. “And that is, ultimately, what happened.”
Neither Facebook nor the FTC has issued a comment.