Facebook’s stock went up after news of a record-breaking $5 billion FTC fine for various privacy violations broke today.
That, as the New York Times’ Mike Isaac points out, is the real story here: the United States government spent months coming up with a punishment for Facebook’s long list of privacy-related bad behavior, and the best it could do was so weak that Facebook’s stock price went up.
The FTC settlement, at least as it is described in numerous reports, will amount to little more than a slap on the wrist. Facebook will get to put to bed all of the agency’s investigations into its privacy practices. Although it will face some additional oversight over its privacy practices, it won’t have any restrictions on its ability to collect or share data with other companies or organizations, according to The New York Times. And it doesn’t look like Zuckerberg will be held personally responsible for any of his company’s multiple failings or be under any particular scrutiny going forward.
The largest FTC fine in the history of the country represents basically a month (49 days) of Facebook’s revenue. Facebook had $15 billion in revenue last quarter alone, and $22 billion in profit last year. It represents less than 1% of its $580 billion market capitalization and only about 7% of Mark Zuckerberg’s net worth.
Fines and punishments are only effective when they provide negative consequences for bad behavior. But Facebook has done nothing but behave badly from inception, and it has only ever been slapped on the wrist by authority figures and rewarded by the market. After all, Facebook was already under a previous FTC consent decree for privacy violations imposed in 2011, and that didn’t seem to stop any of the company’s recent scandals from happening.
Members of Congress are already opposing this settlement — Rep. David Cicilline is calling it a “Christmas present,” while Senator Ron Wyden says the FTC has “failed miserably.” Senator Richard Blumenthal says the decision is “inadequate” and “historically hollow,” and Senator Mark Warner says “It’s time for Congress to act.”
There are surely going to be many more statements and strongly-worded condemnations of the FTC in the weeks ahead, as the settlement goes through Justice Department review and inevitable approval. But words are just words, really.