
FTC Approves Roughly $5B Facebook Settlement - CaliforniaKarl
https://www.wsj.com/articles/ftc-approves-roughly-5-billion-facebook-settlement-11562960538?mod=rsswn
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halfmatthalfcat
Still distraught that Equifax, which was so egregious, was not disciplined at
this level.

~~~
awillen
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
>> 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.

~~~
zaroth
Perhaps in the sense that they have a session cookie that tracks impressions
of sites which reference them on the web, and that information they have that
their users uploaded that happen to also reference you.

But not anything like in the sense of a logged in user and the level of
knowledge they have about actual users.

Facebook knows a lot less about non-registered users than Google does, for
instance.

And in the sense of the Cambridge Analytica scandal, which is what this fine
is about, my understanding is that non-users were _entirely_ unaffected.

~~~
skybrian
Why do you think Google knows more than Facebook?

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megous
Search queries reveal a lot.

~~~
djakjxnanjak
Do we consider people making search queries on Google to be non-users?

~~~
zaroth
I think yes if you’re not logged in. But there’s plenty of ways Google is
tracking you, and serving ads to you, away from Google.com too.

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Balgair
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...](https://www.cnbc.com/2019/04/24/facebook-
earnings-q1-2019.html)

~~~
vzidex
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.

~~~
scarface74
Nothing can change Facebook that Zuckerberg doesn’t want to change. He has a
controlling interest.

~~~
adventured
Tell that to the talent that no longer wants to work for Facebook and the
executives fleeing the company.

It's an extremely fast way to change a company, no matter how much voting
power Zuckerberg has. It'll kick Facebook into old age stagnation and rot mode
faster than just about anything else. To say nothing of what happens when an
organization no longer trusts and believes in its CEO.

Which is to say, Zuckerberg's voting power doesn't make him or Facebook immune
to suffering numerous consequences of poor leadership. That can rather
dramatically change Facebook. Depending on the extent and duration of that
poor decision making obviously.

~~~
scarface74
_Tell that to the talent that no longer wants to work for Facebook and the
executives fleeing the company._

And there are thousands of college graduates who will spend months learning
LeetCode and be glad to take their places and get a total comp of $250K+ a
year. You severely overestimate how few people care more about the “greater
good” than collecting a nice check.

~~~
Balgair
Maaaaybe. I'd like to think that there is an evaporative effect occuring
there.

Assuming that more ethical people are better to work with and vice versa, then
as more ethical people leave, the work enviroment gets worse and worse.

Like, payroll issues take longer to deal with, your co-workers aren't as up
for beers on Fridays, your boss isn't as on your side as you'd like. So, the
elves leave middle earth.

Eventually, the company can end up in a situation where payroll issues are
impossible to deal with, where your co-workers are _far_ too free to hit up a
bar on a Tuesday night, where your boss could care less about you. So then
even some of the skuzz-bucket people say they have had enough.

So, yeah, FB is good right now and can use their funds to pay people to deal
with those issues. But fines like the one they got today are going to hamper
that process.

As has been said for decades: Culture is everything.

~~~
scarface74
I’ve worked for 20+ years and I’ve learned that the boss “never cares about
me”. Anyone who thinks that your company “cares about you” is in for a rude
awaking.

~~~
Balgair
I mean, there is a lot of space between the type of boss that could care less
and the type of boss that actively tries to harm.

Also, it really does depend on the firm. I've worked a lot of jobs that
couldn't be arsed to know my name. I've worked a lot fewer jobs that really
did care about me, but I have been there and seen them.

~~~
scarface74
_I 've worked a lot fewer jobs that really did care about me, but I have been
there and seen them._

Let’s do a thought experiment. Let’s say over lunch that you told your boss at
one of those companies “that really did care” about you that you just bought a
house and that you and your spouse are expecting a child. Then the next week
that because of a strategic shift/missed earnings/acquisition where the
acquirer wanted to find “synergies” they decided they were going to let you
go. What do you think is going to happen?

~~~
Balgair
Generally the firms that care are under 10 people in size.

As such, it depends. And yes, I've seen those exact conversations play out in
the favor of the employee before, about a dozen times, even in the larger
firms. I've also seen it play out badly too.

~~~
scarface74
How many firms that are under 10 people in size do you know of that are not VC
backed and therefore beholden to their investors who definitely don’t care
about the employees?

~~~
Balgair
Not sure I understand the question, but I've never worked for a VC backed
start-up. I'm in medtech, not CS.

EDIT: Also, 90% of all companies in the US are under 20 people:
[https://www.businessinsider.com/us-employment-by-firm-
size-h...](https://www.businessinsider.com/us-employment-by-firm-size-has-a-
fat-tailed-distribution-2015-6)

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alt_f4
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
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_f4
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.

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

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swebs
What amount would you say is enough?

~~~
colechristensen
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.

~~~
closetprep
This was already priced into the stock value which is why it hasn't had an
effect

~~~
colechristensen
I'm not talking about what happened today, but the long term effect.

Yes it was priced into the stock and that price is about equal to the price of
FB a year ago.

I want that price, the long term price not the intraday reaction, I want the
long term price to be down more than 10%.

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

That will be noticed.

~~~
kingnothing
They had already budgeted for it earlier this year.

[https://www.nytimes.com/2019/04/24/technology/facebook-
ftc-f...](https://www.nytimes.com/2019/04/24/technology/facebook-ftc-fine-
privacy.html)

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redsparrow
> 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-...](https://www.theguardian.com/technology/2019/jul/12/facebook-
fine-ftc-privacy-violations)

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

~~~
dymk
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.

~~~
alberth
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](https://news.ycombinator.com/item?id=19742270)

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residentfoam
$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.

~~~
conanbatt
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.

~~~
residentfoam
> 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.

~~~
conanbatt
Thats the wrong mental model. Most operations facebook does is in the few
cents to a few dollars: that is insignificant to the total revenue, so they
would forgo every single thing relative to the general income, and you can
guess what happens afterwards.

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

[https://ycharts.com/companies/FB/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"

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

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alberth
FB stock _up_ ~2% today.

~~~
dmix
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.

~~~
alberth
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](https://news.ycombinator.com/item?id=19742270)

~~~
pertymcpert
That is the case. A $5B estimated fine puts a rough ballpark on the potential
fine. I.e. it's likely not going to be over $10bn. That could easily bump the
stock up, with extra potential upside due to the uncertainty of what the
actual figure will be. That is, could it be $8B? There is extra uncertainty
priced in which has now been fully lifted.

