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The US government will impose a staggering $ 5 billion fine on Facebook for violating the privacy of its users, following the Cambridge Analytica scandal.
Facebook investors celebrate.
Wall Street has slightly increased the value of Facebook shares, reaching nearly $ 205, following the announcement of the new sanction set by the Federal Trade Commission this afternoon via the Wall Street Journal. Another way of saying it: Facebook investors were very optimistic about the company a year ago, when they thought their shares were worth $ 210. But they feel very good about it now too.
The most obvious reason for this disconnect is that Facebook had told investors that it was planning to pay a fine of up to $ 5 billion and that the company had set aside $ 3 billion to pay for it. fine this spring.
Then there's the fact that $ 5 billion represents a very large number and a huge fine for a FTC fine – the biggest fine she's directed against a Silicon Valley company was a 23-million-dollar strike. dollars for Google in 2012 – it's a very feasible number for Facebook.
The company realized profits of $ 22.1 billion last year. This year, even after taking into account the fine, analysts estimate that it will bring in more than $ 19 billion. And by 2021, according to RBC analyst Mark Mahaney, Facebook is expected to bring in more than $ 35 billion a year.
But the main source of optimism – from Wall Street's point of view – is that the federal government does not seem to be moving towards a regulation that could significantly change the way Facebook manages its business, which depends on the transformation in detailed information of its users. Targeted advertising.
New York Times: "In addition to fine, Facebook has agreed to more comprehensive monitoring of how it processes user data, according to [sources]. But none of the terms of the settlement will limit Facebook's ability to collect and share data with third parties. "
In other words, Facebook will need more lawyers and other compliance experts once the new rules of the FTC are official, but Facebook can engage many experts and lawyers in the field. of conformity. The Facebook advertising machine, which pays for them, will work at full speed.
It is still possible that the revelations on Cambridge Analytica, the data company that was able to extract data on tens of millions of Facebook users without their consent, have greater repercussions. Facebook will continue to be the subject of close scrutiny outside of America. In the United States, criticism from politicians across the political spectrum is repeated: on Thursday, President Donald Trump and Federal Reserve Chairman Jerome Powell attacked Facebook's plan to create its own digital currency .
And Friday, after the announcement of the fine imposed by the FTC, Senator Mark Warner (D-VA) said that a financial penalty was not enough: "Given the repeated violations of the privacy by Facebook, it is clear that fundamental structural reforms are needed. As the FTC can not or will not put reasonable safeguards in place to ensure the privacy of users and data, it is time for Congress to act. "
Facebook itself said that he was in favor of additional regulation (that he would again be able to handle given his enormous resources). And the company also said it was working to reorient itself to focus on private messaging between its users – an approach it has never directly linked to Cambridge Analytica and other scandals related to the protection of privacy. privacy, but we can connect ourselves.
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