The Federal Trade Commission last week decided to impose a roughly $5 billion fine on Facebook as part of a settlement in a long-running probe into whether or not the social media giant’s infamous Cambridge Analytica scandal violated a 2012 consent degree in which Facebook agreed to better protect user privacy.
The fine, which has been referred to the Justice Department’s civil division for review, would be the largest ever handed out to a tech company by the federal government. But if Facebook’s recent stock price is anything to go by, the company is not at all fussed by the fine.
As Business Insider reported this week, after news of the fine broke last Friday, Facebook’s stock value actually rose 1%, netting CEO Mark Zuckerberg — who owns 88.1% of all Facebook shares — an extra $1.1 billion dollars. In April, Facebook had also reportedly set aside $5 billion in anticipation of a decision by the FTC, further dampening any sort of effect the fine may have hoped to have.
Lawmakers fiercely criticized the Facebook settlement, which was passed 3-2 along party lines by the Republican-controlled FTC. “The FTC just gave Facebook a Christmas present five months early,” Rep. David Cicilline (D-RI) said in a statement. “It’s very disappointing that such an enormously powerful company that engaged in such serious misconduct is getting a slap on the wrist.”
“Given the magnitude of the Cambridge Analytica violation, the FTC not only needs to impose a more significant fine, they need to be clear about what Facebook must change when it comes to data practices,” said Sen. Amy Klobuchar, (D-MN) who previously co-introduced legislation to improve the transparency of political ads on Facebook. “It appears that they haven’t done that, which is why Congress must take action.”
In addition, Sens. Ed Markey (D-MA), Richard Blumenthal (D-CT), and Josh Hawley (R-MO) all wrote to the FTC on Tuesday, describing the fine as “woefully inadequate,” and asking for an explanation of the process by which the commission determined the size of the fine, as well as if it had interviewed Zuckerberg or other top-ranking Facebook executives before deciding on its settlement.
Regardless of the intricacies of the settlement, the reaction of Facebook to what was supposed to be a record-breaking federal fine shows not only the obvious financial power of the social media behemoth, but also how ill-equipped U.S. regulators currently are to level out significant, impactful punishments to such companies.
If regulators want inspiration, they might do well to look to the European Union’s General Data Protection Regulation (GDPR). The framework, which was introduced in the spring of 2018, is designed to give EU citizens better control of their data and better hold companies which misuse that data to account.
Crucially, the GDPR allows for a maximum fine equivalent to 4% of the company’s global revenue. These penalties, in turn, could potentially make the FTC’s “record-breaking” fine of $5 billion much more common for Facebook.