A $ 5 billion fine for Facebook

NEW DELHI: With $ 5 billion, the Federal Trade Commission (FTC) fine on Facebook is by far the largest one granted to a technology company, far exceeding the second largest, with $ 22 million for Google in 2012.

The long awaited punishment, to which Facebook is well prepared, is unlikely to reduce the pockets of the social media giant. But he is also likely to impose additional restrictions on society and another lengthy scrutiny.

Several reports released Friday said the FTC had voted to punish Facebook for violating privacy and mismanaging user data. Most of them cited an unnamed unnamed person who was aware of it.

Facebook and the FTC refused to comment. The 3-2 vote broke the party lines, with Republicans in support and Democrats in opposition to the settlement, according to reports.

The case is now moving to the civilian division of the Department of Justice for review. It is not clear how long the process would take, even if it is likely to be approved. A spokeswoman for the Justice Department declined to comment on the case on Facebook.

For many companies, a fine of $ 5 billion would be disabling. But Facebook is not the most business. Its sales reached nearly $ 56 billion last year. Analysts expect about $ 69 billion this year, according to Zacks. As a one-time expense, the Company will also be able to exclude the amount of its adjusted earnings, the result to which investors and financial badysts pay particular attention.

"This closes a dark chapter and places it in the rearview mirror with Cambridge Analytica," said Daniel Ives, an badyst at Wedbush. "Investors still feared that the fine would not be approved, and now the street can breathe a little easier."

Facebook has earmarked $ 3 billion for a potential fine and announced in April that it planned to pay up to $ 5 billion.

But although Wall Street, and likely Facebook executives, may be breathing a little easier, the fine alone has not appeased critics on Facebook, including privacy advocates. and legislators.

"The $ 5 billion sentence announced is barely a wrist shot, not even a slap," said Senator Richard Blumenthal, a Connecticut Democrat. "Such a financial punishment for deliberate and blatant illegality is a radical change for a company that earns tens of billions of dollars every year."

With others, he wondered if the FTC would force Facebook to make significant changes to user data management. This may include limitations on the information collected about people and how they target ads. At present, it is unclear what measures the regulation includes beyond the fine.

Privacy advocates have been asking the FTC to connect to Facebook for a decade, but during this period, Washington's money, power, and influence have increased.

"In the United States, privacy regulations are being violated, and heavy after-the-fact fines are important, but more importantly, there are strict and clear rules to protect consumers." said Nuala O 'Connor, president and CEO of the Center for Democracy and Technology. . CDT is pushing for federal privacy legislation online.

Some called on the FTC to hold Facebook's CEO, Mark Zuckerberg, personally responsible for the privacy breaches, but on the basis of the distribution of party votes, experts said this was not the case .

Marc Rotenberg, chairman of the Electronic Privacy Information Center, an online privacy advocacy group, said he was "confused" about why the Democratic commissioners did not support the settlement and claimed that he suspected, without having seen it, that this was due to the issue of Zuckerberg's liability.

"But I thought it was wrong," he said, adding that the EPIC was taking on more global limits on how Facebook handled user privacy.

Since the Cambridge Analytica debacle erupted over a year ago and prompted the FTC's investigation, Facebook is committed to doing a better job by correcting the data of its users . This scandal revealed that a data mining company affiliated with the 2016 campaign of President Donald Trump had inappropriately accessed private information from 87 million Facebook users via a web application. quiz. The issue was whether Facebook was violating a 2011 agreement with the FTC regarding user privacy.

Other leaky controls have also appeared since. Facebook acknowledged giving large technology companies such as Amazon and Yahoo extensive access to users' personal data, thereby exempting users from its usual privacy policies. And he collected call logs and SMS from phones running Google's Android system in 2015.

Wall Street seemed unfazed at the prospect of the fine. Shares of Facebook closed at $ 204.87 on Friday and added 24 cents after normal hours. The stock is up more than 50% since the beginning of the year. In fact, the market value of Facebook has increased by $ 64 billion since the publication of its report on the April results, where it announced how much it expected a fine.

Rhode Island Democrat Representative David Cicilline said in a statement that the fine offered Facebook a Christmas present five months earlier. It is very disappointing that a company of such tremendous power that indulges in such a serious mistake receives a pat on the fingers. This fine is a fraction of Facebook's annual income. "

Cicillin heads the House Antitrust Subcommittee on the Judiciary, which conducts a bipartisan investigation into the dominance of the market by large technology firms.

The fine, however, does not mean the end of Facebook's problems. The company faces numerous other investigations, both in the United States and abroad, that could result in their own fines and, more importantly, possible limitations on data collection. This includes nearly a dozen Irish Data Protection Commissioner, who oversees the regulation of privacy in the European Union.