Facebook's Billion Dollar FTC Fine Is a Case of Too Little
Facebook has been fined a whopping US$ 5 billion by the U.S. Federal Trade Commission for its handling of Cambridge Analytica data scandal and other repeated privacy violations. The US$ 5 billion fine against Facebook represents approximately nine percent of the company's 2018 revenue.
It charged the social network for failing to comply with the consent decree it agreed to in 2012 for misrepresenting to consumers the extent of data sharing with third-party applications and the control consumers had over that sharing.
The fact that the Cambridge Analytica incident happened despite these privacy protections in place is telling.
In addition, Facebook has agreed to pay US$ 100 million to federal regulators for making "misleading disclosures" about its data being misused in the years after it knew that Cambridge Analytica had gotten hold of user data.
Along similar lines, the FTC has sued data analytics company Cambridge Analytica, and settled with the firm's former chief executive and an app developer who worked with the company, alleging they employed deceptive tactics to harvest personal information from tens of millions of Facebook users for voter profiling and targeting.
The FTC settlement also imposes stringent privacy expectations upon Facebook, calling for greater oversight of third-party developers, including a requirement to terminate developers' access to users' information if they fail to certify that they are in compliance with Facebook's platform policies or fail to justify their need for specific user data.
Meanwhile, a third-party organisation will be tasked with reviewing Facebook's data-collection practices and those of its other services, Instagram and WhatsApp, over the next 20 years. In a statement posted on Facebook, CEO Mark Zuckerberg, said the company will review its systems and bring new privacy controls.
What's more, in a separate blog post, Facebook's general counsel Colin Stretch said: "The agreement will require a fundamental shift in the way we approach our work and it will place additional responsibility on people building our products at every level of the company. It will mark a sharper turn toward privacy, on a different scale than anything we've done in the past."
Although the settlement fine is unprecedented, it's a classic case of too little. By abstaining from pursuing even greater punishments like a substantially larger fine and finding CEO Mark Zuckerberg personally liable, the proposed oversight changes do not fundamentally alter the way Facebook collects and monetises its users' information.
Advertisers, app developers, and publishers — simply by virtue of using Facebook's tools like Like button, Login single sign-on, Pixel ad tracker, or other APIs — can still transmit information about users' activities off the social network — whether or not they have a Facebook account or are logged in to Facebook.
Neither does it provide public transparency about how Facebook handles consumer data, nor address Facebook's dominant presence in the social media and advertising industries. Even worse, Facebook does not have to admit any guilt for its transgressions.
"The settlement imposes no meaningful changes to the company's structure or financial incentives," FTC commissioner Rohit Chopra wrote in his dissent. "Nor does it include any restrictions on the company's mass surveillance or advertising tactics. Instead, the order allows Facebook to decide for itself how much information it can harvest from users and what it can do with that information, as long as it creates a paper trail."
"The proposed settlement lets Facebook off the hook for unspecified violations," Chopra said, adding the privacy committee is powerless to take any real action and that the requirements are so vague, they effectively provide a rubber stamp for Facebook to take whatever action it wants.
The development comes as the U.S. Department of Justice (DoJ) filed a fresh lawsuit against the company for violating the 2012 consent order from the FTC. The social networking giant also disclosed that it's being investigated in a new probe by the FTC for possible antitrust violations.
In other news, the DoJ on Tuesday announced it's officially opening an probe into how large online platforms, like Facebook, Google, Apple, and Amazon, may be abusing their market power to shut down competition.
That Facebook has chosen to settle its privacy violations even as it continues to post record profits is symptomatic of a larger trend that has ailed big tech. It has been shown again and again that it's far cheaper for companies like Facebook, even with large financial penalties, to invest less in security and simply apologise and brazenly accept a fine when things go wrong.
Last July, when Google was fined a hefty US$ 5.1 billion by the European Commission for abusing its dominance in the smartphone market to favour its own services, the search giant hardly felt it. Google, in fact, not only absorbed the penalty, but also made $3.2 billion in profits.
The lack of consequences only goes on to show that even record-setting fines would have barely any impact on Facebook. If anything, it will be business as usual.
These companies are called monopolies for a reason. They are simply too big and ubiquitous to fail, and even when they do so, they can pick up right from where they left off, with little or no cost to their bottom lines.
It charged the social network for failing to comply with the consent decree it agreed to in 2012 for misrepresenting to consumers the extent of data sharing with third-party applications and the control consumers had over that sharing.
The fact that the Cambridge Analytica incident happened despite these privacy protections in place is telling.
In addition, Facebook has agreed to pay US$ 100 million to federal regulators for making "misleading disclosures" about its data being misused in the years after it knew that Cambridge Analytica had gotten hold of user data.
Along similar lines, the FTC has sued data analytics company Cambridge Analytica, and settled with the firm's former chief executive and an app developer who worked with the company, alleging they employed deceptive tactics to harvest personal information from tens of millions of Facebook users for voter profiling and targeting.
The FTC settlement also imposes stringent privacy expectations upon Facebook, calling for greater oversight of third-party developers, including a requirement to terminate developers' access to users' information if they fail to certify that they are in compliance with Facebook's platform policies or fail to justify their need for specific user data.
Meanwhile, a third-party organisation will be tasked with reviewing Facebook's data-collection practices and those of its other services, Instagram and WhatsApp, over the next 20 years. In a statement posted on Facebook, CEO Mark Zuckerberg, said the company will review its systems and bring new privacy controls.
What's more, in a separate blog post, Facebook's general counsel Colin Stretch said: "The agreement will require a fundamental shift in the way we approach our work and it will place additional responsibility on people building our products at every level of the company. It will mark a sharper turn toward privacy, on a different scale than anything we've done in the past."
Although the settlement fine is unprecedented, it's a classic case of too little. By abstaining from pursuing even greater punishments like a substantially larger fine and finding CEO Mark Zuckerberg personally liable, the proposed oversight changes do not fundamentally alter the way Facebook collects and monetises its users' information.
Advertisers, app developers, and publishers — simply by virtue of using Facebook's tools like Like button, Login single sign-on, Pixel ad tracker, or other APIs — can still transmit information about users' activities off the social network — whether or not they have a Facebook account or are logged in to Facebook.
Neither does it provide public transparency about how Facebook handles consumer data, nor address Facebook's dominant presence in the social media and advertising industries. Even worse, Facebook does not have to admit any guilt for its transgressions.
"The settlement imposes no meaningful changes to the company's structure or financial incentives," FTC commissioner Rohit Chopra wrote in his dissent. "Nor does it include any restrictions on the company's mass surveillance or advertising tactics. Instead, the order allows Facebook to decide for itself how much information it can harvest from users and what it can do with that information, as long as it creates a paper trail."
"The proposed settlement lets Facebook off the hook for unspecified violations," Chopra said, adding the privacy committee is powerless to take any real action and that the requirements are so vague, they effectively provide a rubber stamp for Facebook to take whatever action it wants.
The development comes as the U.S. Department of Justice (DoJ) filed a fresh lawsuit against the company for violating the 2012 consent order from the FTC. The social networking giant also disclosed that it's being investigated in a new probe by the FTC for possible antitrust violations.
In other news, the DoJ on Tuesday announced it's officially opening an probe into how large online platforms, like Facebook, Google, Apple, and Amazon, may be abusing their market power to shut down competition.
That Facebook has chosen to settle its privacy violations even as it continues to post record profits is symptomatic of a larger trend that has ailed big tech. It has been shown again and again that it's far cheaper for companies like Facebook, even with large financial penalties, to invest less in security and simply apologise and brazenly accept a fine when things go wrong.
Last July, when Google was fined a hefty US$ 5.1 billion by the European Commission for abusing its dominance in the smartphone market to favour its own services, the search giant hardly felt it. Google, in fact, not only absorbed the penalty, but also made $3.2 billion in profits.
The lack of consequences only goes on to show that even record-setting fines would have barely any impact on Facebook. If anything, it will be business as usual.
These companies are called monopolies for a reason. They are simply too big and ubiquitous to fail, and even when they do so, they can pick up right from where they left off, with little or no cost to their bottom lines.
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