On Wednesday, Facebook announced that it expected to be fined up to $5 billion by the Federal Trade Commission for privacy violations — the same amount of money as the social network’s initial public offering in 2012. In its quarterly financial statement, Facebook revealed it intended to eat a penalty somewhere between $3 billion and $5 billion.
For months, Facebook has been negotiating with the FTC regarding a violation of a 2011 privacy consent decree. According to the agency, Facebook “deceived consumers by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public.” A new investigation was opened in 2018 after the Cambridge Analytica scandal, in which it emerged that Facebook exposed the personal information of almost 50 million users in an effort funded by the right-wing billionaire Mercer family that intended to use Facebook data to cater political advertising toward users in an attempt to influence their votes.
If Facebook’s estimate is anywhere near the actual levy the FTC hands down, it will mark a historic fine against a tech company: the largest prior FTC fine in the field was $22 million against Google in 2012 for misrepresenting to Safari users users “that it would not place tracking ‘cookies’ or serve targeted ads.” As the New York Times notes, the fine could mark a turning point in the political treatment of the tech industry:
Levying a sizable fine on Facebook would go against the reputation of the United States of not restraining the power of big tech companies. For years, American regulators have faced criticism that they allowed Silicon Valley firms to grow unchecked, even as their European counterparts aggressively brought actions against tech companies — including fining Google a record $5.1 billion last year for abusing its power in the mobile phone market.
For the Trump administration, penalizing Facebook would be a defining action. Although President Trump has rolled back scores of business regulations, he and others in Washington — including Democrats — have coalesced around calling for greater scrutiny and enforcement of tech companies. Senator Elizabeth Warren, Democrat of Massachusetts and presidential candidate, has called for the breakup of Amazon, Google and Facebook. And Mr. Trump has sounded alarms over the dominance of the firms and their control over speech and the distribution of information.
But as a financial penalty, the $3 to $5 billion mark won’t dent a company that earns $56 billion in annual revenue in any meaningful way. “Facebook must be held accountable — not just by fines — but also far reaching reforms in management, privacy practices and culture,” Connecticut Senator Richard Blumenthal responded on Twitter. And as the Ringer staff writer Victor Luckerson noted, the social media company appears to be presenting two contrasting faces to the public and to investors: