FTC Approves Roughly $5B Facebook Settlement

https://www.wsj.com/articles/ftc-approves-roughly-5-billion-facebook-settlement-11562960538?mod=rsswn

by CaliforniaKarl • 7 years ago

119 114 7 years ago

wsj.com

mikece• 7 years ago

Even though that's a lot of money... I can't help thinking it's not nearly enough.

swebs2• 7 years ago

What amount would you say is enough?

philipov• 7 years ago

50 billion is the right order of magnitude.

colechristensen3• 7 years ago

Enough to put shareholder equity at risk, or in other words, a fine on the scale of bankruptcy risk.

FB is flat over the last year, I would like to see a fine that results in a significant loss of market cap, preferably something which would require selling off business units to stay solvent.

edf132• 7 years ago

$5b is a record fine for this... I’m sure they agonised and struggled to get it this high. It’s not even been ratified yet.

Can you really see a headline of a $10/20/50b fine for Facebook?

Balgair7• 7 years ago

Q12019 revenue was ~$15B [0]. So, about a month's worth of revenue. Honestly, 1/12th of a year's revenue is a fair bit of pain. It's not exactly a slap on the wrist.

My econ-mojo may be really off, but revenue is more akin to the gross profit, not the net profit, correct?

[0] https://www.cnbc.com/2019/04/24/facebook-earnings-q1-2019.ht...

tylerhou• 7 years ago

Gross profit refers to revenue minus non-fixed costs. Net profit refers to gross profit minus fixed costs (e.g rent).

Revenue is how much you take in before costs. An analogy of revenue is how much money your employer pays you — before you deduct taxes, food, rent, etc.

Balgair7• 7 years ago

Thank you!

vzidex• 7 years ago

1/12th of a year's revenue is a bit of pain, but it won't cause any fundamental changes at Facebook I think. This just sends the message that you don't have to care about things like ethics or user data being private as long as you have a big enough war chest to pay off the government. Either the fine should've been bigger, or coupled with new regulation.

scarface746• 7 years ago

Nothing can change Facebook that Zuckerberg doesn’t want to change. He has a controlling interest.

colechristensen3• 7 years ago

Regulation like this works when there are increasing consequences.

This fine is $5B, if they keep doing the same sort of thing, what is the next fine going to be?

MarkMc• 7 years ago

It's not really the size of the fine compared to total annual revenue or size of the war chest that matters. The correct comparison is to the boost in revenue over multiple years: Did the shady privacy practices increase Facebook's revenue by at least $5 billion over the past several years? If yes, the fine should have been bigger.

halfmatthalfcat• 7 years ago

Still distraught that Equifax, which was so egregious, was not disciplined at this level.

dymk3• 7 years ago

Facebook got a lot more news coverage over a longer period of time

Jach4• 7 years ago

Has anyone done an estimate to how much it would cost to roll out an actual ID system instead of continuing to use SSNs? Perhaps this unrelated $5BN can be used towards it. /s

dymk3• 7 years ago

It's not a matter of money cost. Americans are (in some ways rationally, in most irrationally) terrified of a national ID.

dahfizz• 7 years ago

Unfortunately I don't see something like that ever passing America. Nobody supports a national ID.

paulddraper5• 7 years ago

What does "actual ID system" mean?

SSN is literally a national ID system. Assigned at birth/immigration/residency. Used by national government to pay benefits, track Medicare membership, receive taxes, etc.

If you're talking about adding photos and fingerprints and stuff to SSN or equivalent...that's not a cost thing. That's 100% a privacy thing.

awillen• 7 years ago

Just so incredibly disturbing. For all of Facebook's fault, it's very easy to opt out of using it. When a service that the government forces you to use loses your data, heads should roll.

enraged_camel• 7 years ago

> For all of Facebook's fault, it's very easy to opt out of using it.

Not really. Facebook has shadow profiles of non-users.

lawnchair_larry• 7 years ago

You can’t opt out of facebook at all. They have web bugs, they have a 3rd party mobile analytics SDK, they have contact lists from anybody who knows you, they have things you didn’t know you are touching.

rolltiide• 7 years ago

Facebook doesn't have a consumer facing product that people pay for

Equifax did and offered it for free (credit monitoring/freezing upsell), even though it didn't fix the problem its monetary value masked the settlement.

notinversed• 7 years ago

Which level?

https://pbs.twimg.com/media/D_TkbPZXkAITIol.jpg

There is zero impact to Facebook from this fine. They are celebrating with champagne and looking at new yacht prices in Menlo Park.

Nobody goes to jail, everyone keeps their jobs. They only broke Democracy, it seems like that would be the one crime you wouldn't just get off scot free for. The FTC is complicit, we don't seem to have a functional regulatory system in this country any more.

refurb• 7 years ago

Q4’18 profit was $6.9B, so $5B is nearly 1/4 of a year’s profit.

That will be noticed.

kingnothing• 7 years ago

They had already budgeted for it earlier this year.

https://www.nytimes.com/2019/04/24/technology/facebook-ftc-f...

akavi• 7 years ago

Stock market seems to think it was a good deal for FB; share price jumped ~1.3% on the news.

dymk3• 7 years ago

Facebook previously stated that they were expecting a fine of ~$5B. The fine + uncertainty was already priced into the stock.

The market is reacting to the removal of that uncertainty, which is the same as a reduction in risk holding the stock.

alberth3• 7 years ago

And when FB previously announced they expected a $5B fine, their stock was up 10% on that day.

https://news.ycombinator.com/item?id=19742270

alberth3• 7 years ago

FB stock up ~2% today.

dmix• 7 years ago

Because FB accurately predicted the fine amount and doesn’t have to use any more money. The market are already adjusted to the FTC fine risk. The only risk measure by this point was if it would be higher than $5b.

alberth3• 7 years ago

But that’s not the case. When FB announces 3 months ago they were holding back $5B for an estimated fine, their stock was up 10% that day.

https://news.ycombinator.com/item?id=19742270

nrclark• 7 years ago

Where does this money go, out of curiosity? Does it go into the FTC's budget? Govt general fund?

residentfoam2• 7 years ago

$5B is peanuts for FB, just Mark personal wealth is ~$74B, he could pay the fine himself.

The should have fined FB on some % of their total revenue, like GRDP. I'd say 15/20% at least.

conanbatt2• 7 years ago

5 billion is a truck load of cash and any company with the least competitive capacity will be willing to spend up to 4.999.999.999 to avoid paying it.

residentfoam2• 7 years ago

is a truck load of cash

it is relative, for normal people it is indeed a ton of cash, but you have to compare that to the size of FB. In that respect, $5B is not that much.

edf132• 7 years ago

The problem is 15/20% gets into scary headlines that nobody wants to be behind

icebraining• 7 years ago

Their revenue for 2018 was $56B, so while not 15/20%, it's higher than the maximum fine of the GDPR (4%) would be.

Though the GDPR is per violation, so technically one can be fined for more than that.

alt_f42• 7 years ago

I'm somewhat amazed how many people on here seem to be happy that large tech companies are forced to pay giant fines to the government when their salaries are paid or propped up by the market created by these same companies.

I'm not saying FB has done no wrong, but is it really 100 times worse than Equifax, Wall Street banks and a host of other more malicious corporate offenders that got a slap on the wrist and a small 1-2 digit fine?

temepsflk• 7 years ago

2 wrong does not make one right.

All these companies should be paying giant fines. FB's fine is not giant relative to their yearly revenue.

alt_f42• 7 years ago

However, you don't see banksters on bankernews complaining how small their fine is.

They realize that'd be biting the hand that feeds them. From all the big industries, only tech seems to have an active desire to watch itself burn.

If it is not yet obvious, taking large amounts of money from tech companies will impact everyone, including tech employees by forcing job cuts and lowering salaries. Doesn't matter if you work at Facebook.

phlogisticfugu• 7 years ago

Facebook's current market cap is $585B, so this is less than 1% of their market cap

https://ycharts.com/companies/FB/market_cap

About as painful as a bad PR week. And easy to attribute to the "cost of doing business"

redsparrow• 7 years ago

disclosed in April 2019 that it was nearing the end of negotiations with the FTC and expected a fine of between $3bn and $5bn.

That's a quote from the article in The Guardian [0].

Negotiations? They were negotiating their own fine? That sounds so absurd. Surely someone can reply telling me it's normal, but can anyone make an argument for why it makes sense?

[0] https://www.theguardian.com/technology/2019/jul/12/facebook-...

FTC Approves Roughly $5B Facebook Settlement

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