
Two senators say a $5B fine isn’t enough to punish Facebook - enraged_camel
https://arstechnica.com/tech-policy/2019/05/two-senators-say-a-5-billion-fine-isnt-enough-to-punish-facebook/
======
tptacek
This is kind of alarming to me. A fine should scale with the the greater of
the harm done and the amount needed to deter the behavior. But that's not
what's happening here; instead, people are proposing that the fine scale with
Facebook's total revenue. Even Facebook's most ardent critics probably don't
believe they derive a majority (or really even a significant amount) of
revenue from the lax API controls companies like Cambridge Analytica relied
on. The fine should be sufficient to ensure that nobody at Facebook thinks
that being lazy about access to user profiles in their APIs is a good business
decision. It should not, in effect, be a litigation of whether Facebook is on
the whole a good idea.

I don't think Facebook (as constituted) is a good idea! But that doesn't mean
I think the FTC should be able to fine it existentially, unless an existential
fine is really what it takes to defer the specific thing they did that was
unlawful. There's no evidence that $5B --- a record high fine equivalent to
the entire cost of several well-known startups Facebook could have otherwise
acquired rather than lighting that money on fire --- is insufficient to the
task.

~~~
Avshalom
I mean first fines pretty much have to scale with total revenue to deter
behavior

second 5 billion won't even lead to an unprofitable _quarter_ at 2018's
numbers so there's a loooot of room between 5B and an existential fine, we
aren't any where near the slippery part of the slope.

~~~
adventured
> I mean first fines pretty much have to scale with total revenue to deter
> behavior

That's only an effective approach if your goal is to cripple many of the
companies that you fine. Almost no large companies on the planet have the
extreme profit margins of Facebook. Alternatively to avoid that kind of damage
you have to adjust the percentage scale to each individual company's profit
margins (25% revenue fine for Facebook, N% for a retailer with microscopic 3%
profit margins), which instantly makes the revenue approach absurd.

Slap 3M, Walmart, Caterpillar or Costco with the equivalent of a ~25%
quarterly revenue fine, and you'll do severe damage to the company. A 25%
quarterly fine on Walmart's revenue would nearly bankrupt them. As opposed to
Facebook which has profit margins 15-20x greater than eg Costco and can more
or less absorb the fine directly out of its quarterly profit.

I don't see the argument behind using fines as a means to intentionally
severely damage companies, which is what huge revenue-based fines accomplish.

~~~
stevenjohns
> That's only an effective approach if your goal is to cripple many of the
> companies that you fine

Yes, some companies should be crippled. With criminal sentencing, the first
goal is to isolate that person from society as a punishment with reform being
a second consideration. With criminals, judges or magistrates would level
higher-end sentences as an example and you won't hear many people arguing
against a criminal's 15 year sentence by saying it would cripple their
economic output.

Society owes nothing to corporations and this "too big to fail" mentality
creates a system where corporations are above ethics.

Seeing Facebook fined into to a point where they are seriously crippled as a
company will make _a lot_ of other companies change their tune,
internationally, for the better.

~~~
tptacek
TBTF has nothing to do with this. What's being proposed is basically _the
exact opposite of TBTF_ \--- that Facebook is too big _not_ to fine unusually.

If you believe there should be a notion of SITCs --- Systemically Important
Tech Companies --- lobby to pass that law in such a way that it survives
judicial review. But it can't simply be up to the FTC to make that rule up.

------
kevin_thibedeau
Meanwhile Boeing actively subverted government regulation leading to mass
casualties. What should their punishment be?

~~~
crankylinuxuser

        1. Execute the company (dissolve the charter)
        2. throw the board collectively in jail for a time for inaction of illegal actions leading to death
        3. charge all who conspired to subvert laws as a co-conspirators to premeditated murder
        4. Liquidate the company and pay back shareholders not in C levels, the Board, family thereof, or people charged with aforementioned crimes
    

Strong enough?

~~~
LanceH
How about just jail the programmers and engineers since they are the only ones
who ever have a record of what went on.

~~~
yeahitslikethat
Wouldn't be the first time programmers were the only ones to do time for a
company's crimes.

But when I'm asked to implement robosigning and push back now I'm the bad guy.
I won't do it, but another dev did against my and the other developer's
advice. He'll be fine I'm sure. No one will notice.

~~~
crankylinuxuser
And it's not hard at all to see different pieces done, which individually do
not make a crime. However these 10 pieces (read: Agile cards) do make illegal
actions possible.

The management approved this, and the devs worked on it. The devs certainly
didn't execute said code. Now, if they were discussing "this feature allows
fraud but we're going to do it anyway" over jira or email, roast'em.

------
3xblah
Here is the letter.

[https://www.blumenthal.senate.gov/imo/media/doc/5.6.19_Lette...](https://www.blumenthal.senate.gov/imo/media/doc/5.6.19_Letter%20to%20FTC%20re%20Facebook.pdf)

The proposal from these two senators seems reasonable:

"The FTC should propose long-term limits on Facebook's collection and use of
personal information. It should consider setting rules of the road on what
Facebook can do with consumers' private information, such as requiring the
deletion of tracking data, restricting the collection of certain types of
information, curbing advertising practices, and imposing a firewall on sharing
private data between different products, including Facebook's ad platform."

Placing hard limits on data collection and usage seems clearer and more
workable than requiring "user consent" as we saw in the last consent decree.

Sen. Blumenthal's office seems to be one of the few that is willing to call BS
on the type of shenanigans often discussed here on HN.

[https://www.blumenthal.senate.gov/imo/media/doc/01.31.2018%2...](https://www.blumenthal.senate.gov/imo/media/doc/01.31.2018%20Letter%20to%20FTC%20re%20Devumi%20and%20Fake%20Followers.pdf)

------
RcouF1uZ4gsC
>While the Republicans could push through a relatively lenient offer along
partisan lines, doing so could come with heavy political costs for the agency,
since it would expose them to attacks that the Republican majority is soft on
misbehaving technology companies.

One thing that has changed recently in politics is that a significant portion
of Republican base now considers Silicon Valley tech companies as foes. I
would guess that there would actually be a lot of grassroots support for a
massive fine on Facebook.

In the past, tech companies could assume that the Republican affinity for big
business would shield them. Now that has gone.

~~~
Maxamillion96
If you look at conservative opinion formers, like Tucker Carlson, they're
talking about breaking up major firms and so on. I think the ideology that was
pro-oligarchy died on both the left and right in 2008, and only the most
diehard centrists are believers in it

~~~
save_ferris
Really? That really surprises me given the free market arguments that he and
others bring. Do you happen to have a specific example of him arguing this?

~~~
defen
The idea is that the large tech companies are overwhelmingly staffed and lead
by people who qualify as the political left by American standards. As
Breitbart said, "Politics is downstream from culture." \- so if you have the
most important communications platforms the world has ever seen all privately
owned and operated by "the left", that sounds like a bad thing if you're on
"the right", because they can shape discourse however they want - either
overtly by banning people for bad politics or covertly by shadowbanning and
otherwise muting popular voices with undesirable opinions. Imagine if
Google/Facebook/Twitter were owned by the Koch brothers and staffed by members
of the Federalist Society and Heritage Foundation - people on the left would
be doing the same thing Tucker Carlson is doing.

~~~
Maxamillion96
>The idea is that the large tech companies are overwhelmingly staffed and lead
by people who qualify as the political left by American standards.

they're certainly left of fox news, though i wouldn't call fox news "leftist"

------
salimmadjd
my cynical side says there is more to this.

I think FB is a major threat to the distribution of news that is mostly owned
and controlled by the mainstream media owners.

I think this is all part of forcing FB to come to the negotiation table, and
negotiate banning more independent information sources to make these fines go
away.

~~~
Angostura
I don't think Fox News really cares about Facebook

~~~
int_19h
I think that of all the news companies, Fox is probably the one that would
care most, since they have the largest proportion of the audience that's only
there for the daily outrage.

------
cfitz
Original letter from the senators to the FTC chairman here [PDF]:
[https://www.blumenthal.senate.gov/imo/media/doc/5.6.19_Lette...](https://www.blumenthal.senate.gov/imo/media/doc/5.6.19_Letter%20to%20FTC%20re%20Facebook.pdf)

------
Sutanreyu
I've always wondered in cases like these what they actually DO with the money
after they fine huge companies like this... As in, how would they remedy the
damage? Would they use it to go after companies that made money off of
people's personal data or make them develop better privacy features or what
else?

~~~
laythea
Given that the money is a fiat system, without the backing of actual gold,
this money effectively goes back into "the ether".

~~~
chki
I don't think that's true. The money is not destroyed, it is instead
transferred to the government and can be used for various purposes.

Of course you could argue that the government could theoretically decide to
arbitraly print money so any money that goes to the government is actually not
worth anything but since the fed operates independently this is just not true.

~~~
yeahitslikethat
The US treasury loans the cash at zero interest to the Fed (which is actually
a coalition of corporate banks, not a federal government entity).

The Fed then loans _that_ money out with interest and backed by the good faith
in the us government.

This means the banks which as major holders of stock in Facebook, most of whom
want Zuckerberg out as ceo, are also incentivized to pursue a bigger fine.

~~~
chki
Sorry to be a bit harsh but those are a lot of strange claims.

The Fed comes very close to a government entity in that its board is nominated
by the government and confirmed by the Senate. It is not made up of corporate
banks and is definitely not a coalition of corporate banks.

I'm not sure how you get the idea that the US Treasury loans the fine to the
Fed? Do you have a source for that?

And if those big banks are major stock holders of Facebook they definitely do
not want fines imposed on Facebook. Loosing money is the one thing that
businesses need to avoid and fines are a pretty direct way of hurting business
while not being useful in any way. Just because those banks might want to see
Zuckerberg go (which is not necessarily right) they do definitely not want to
loose money to make that happen. Fines are also not very effective in that
regard.

~~~
yeahitslikethat
They want that to happen if it means they can accelerate profits plus interest
on the loans faster than new fine minus $5 billion.

Fed is a corporation source, there are plenty. It's common knowledge, " the
United States Court of Appeals for the Ninth Circuit stated that: "The Reserve
Banks are not federal instrumentalities for purposes of the FTCA [the Federal
Tort Claims Act], but are independent, privately owned and locally controlled
corporations." "

Loans to the banks: "By the end of 2008, Goldman had snarfed up $34 billion in
federal loans – and it was paying an interest rate of as low as just 0.01
percent for the huge cash infusion. "

[https://www.rollingstone.com/politics/politics-
news/secrets-...](https://www.rollingstone.com/politics/politics-news/secrets-
and-lies-of-the-bailout-113270/)

------
jmpman
Why not require all their profit for the next 10 years be put into an escrow
account, such that any violations in those 10 years would result in a
forfeiture of those funds? Seems to be a reasonable deterrent and it drives
the action in the public’s best interest.

~~~
tehlike
You will see them distributing dividends, or spending money on new
initiatives. It is relatively easier for a corporation to show no profit.

And i dislike the idea personally, punishing a company to inexistence is very
unamerican.

------
KorematsuFred
Not sure why the fine must go to government. It creates perverse incentives
here.

------
randyrand
can governments force people to be fired? That might bring things closer to
home.

~~~
save_ferris
Only if a criminal investigation turns up chargeable offenses, sure.

The government can't just tell Zuckerberg to pack up and go home, but felony
charges are about the only way he can be forced out at this point.

------
oliwarner
When we first heard that Facebook was putting $5bn aside for this, wasn't it
clearly a deliberate tactic to steer the inevitable fine, to _suggest_ a
range?

$5bn isn't pocket money, but it's hardly a serious expense for Facebook.
They've [clearly] already accounted for it. It's not punitive.

Add a couple of zeros. Facebook is repeatedly at the bleeding edge of privacy
invasion, acting too late to obvious evils, letting advertisers [essentially]
identify people by offering such exact filters, illegally siphoning off
data... Any action needs to hit Facebook hard enough that their engineers
_feel it_ and start to consider things in what they should be doing, not what
they're technically able to do to churn out more cash.

------
trey-jones
Talk about throwing stones in a glass house...

------
OrgNet
$5B is enough if you also fine them $5B for all other infractions... it should
add up to at least $100B.

------
tasubotadas
The government is building a case against itself for the time when they are
going to f __k up with all the data they have been collecting about the
citizens.

$5B for FB for the leaked emails and likes? How about $50B for the leaked tax
records.

[1] [https://www.atr.org/irs-data-breach-allows-hackers-
steal-30-...](https://www.atr.org/irs-data-breach-allows-hackers-
steal-30-million-taxpayers)

------
fyoving
These two are former state AGs and IMHO their kind should be barred from being
part of any important deliberative body, they are prosecutors with strictly
punitive mindset in a legislative body that is also supposed to encourage
entrepreneurship and look after national interests, and at any rate everyone
should be wary of grandstanding and populist pronouncements by elected
officials.

P.S

State AG should not be an elected position.

~~~
gist
> their kind should be barred from being part of any important deliberative
> body

It is hard for me to not agree with that (at least emotionally) but I would
then argue further to also limit the number of attorneys that are legislatures
since as a very general rule they are trained to think a certain way. Of
course this idea (your idea and my idea) is not practical and will never
happen. But the truth is like with any profession if you are in it long enough
you tend to think in a certain way.

I remember Obama (a trained Harvard Lawyer) thinking he could just sit down
the two parties in the middle east conflict and just have them talk things
out. Like it was going to be some kind of binding arbitration where both sides
were reasonable and not impacted by past biases (or other influences). A
totally ridiculous idea. (Not saying by the way that had anything to do with
the fact that he was trained as an attorney but more that to your point a
person's past can determine greatly how they think things should be handled).

Prosecutors are reinforced by winning even in the face of evidence of
innocence to the contrary just like sports teams win that is the name of the
game not being nice to your opponents.

