
Facebook’s $5B FTC fine is an embarrassing joke - jrepinc
https://www.theverge.com/2019/7/12/20692524/facebook-five-billion-ftc-fine-embarrassing-joke
======
alopecoid
For a subset of users, Facebook leaked "page likes, birthday, and current
city".

Meanwhile, Equifax leaked the social security numbers of more than 145 million
Americans, 200 thousand credit card numbers with expiration dates, and more
than 175 thousand combined driver's licenses, tax/military ID cards, and
passports.

In fact, Equifax has a long history of incompetence in this regard.
[http://wikipedia.org/wiki/Equifax#Security_failings](http://wikipedia.org/wiki/Equifax#Security_failings)

Where's the big fine for Equifax?
[http://reuters.com/article/idUSKBN1JN2YH](http://reuters.com/article/idUSKBN1JN2YH)

...Or the countless others who leaked much more sensitive data (medical
records, for example) and at greater scale?
[http://wikipedia.org/wiki/List_of_data_breaches](http://wikipedia.org/wiki/List_of_data_breaches)

Politicians and media have made Facebook a scapegoat to push their agendas,
while others get away without consequence. The "embarrassing joke" is that the
public buys into it.

~~~
o10449366
I would say the media is just as culpable here given how much influence they
have on public opinion in America (and I would garner that's where most
politicians get their information.) FB directly competes with most media
publications for attention and content so they have a direct profit motive to
target FB. The ironic part is that all the reporting is done under the guise
of protecting or informing public privacy, but media publications continue to
be amongst the worst offenders when it comes to user tracking and privacy
violations. Of course, they'll never report on how they sell out your address,
email, phone number, political views, etc. if you subscribe to their magazine
because heaven forbid they hold themselves to some higher standard.

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tptacek
No, it's not:

* The fine, an FTC record-breaker, is equivalent to the cost of simultaneous acquisitions of multiple high-profile startups.

* A mid-single-digits repetition of this fine would deplete Facebook's cash reserves entirely.

* The fine covers specific conduct committed by Facebook (violations of their previous consent decree) that almost certainly netted the company multiple orders of magnitude less money than the fine cost them.

* The fine was anticipated long before it was announced and has been priced into Facebook's stock; we can't look at the spot price now and know what it would have been without the fine factored in, because that's not how stock prices work.

The purpose of the fine wasn't to punish Facebook for being Facebook; much as
I might want that to happen, FTC doesn't have the authority to do that, nor
should it, since it's an unelected administrative apparatus without lawmaking
power. The point is to deter future violations of this and similar consent
decrees at Facebook and other companies (Facebook being the largest of that
cohort of companies). It surely accomplished that: whatever money Facebook
made off of Cambridge Analytica and similar enterprises is surely dwarfed by
the $5B fine, since chicanery like that isn't Facebook's core business.

In the US, when a wealthy person parks in front of a fire hydrant, we don't
give them a $100,000 parking ticket; the fine is scaled to the offense, not
the offender.

~~~
kevingadd
"Scaled to the offense, not the offender" is a good principle, but how do you
make it work for offenders like Facebook or Uber? Uber used their massive war
chest to basically ignore laws on a massive scale, and we've now seen that
Facebook was happy to go on and commit more violations even after being
scolded by the FTC before.

What makes this fine different, other than being bigger? They can afford it.
Why will they change their behavior now when they didn't before? Other
companies of this sort haven't changed their behavior. Will Facebook finally
learn after they commit even larger offenses and then get slapped with another
larger fine 5 years later?

Like, realistically speaking: "Profit" here is not the goal, especially not in
the earlier phase. FB making a billion dollars is a side effect of the other
things they really want, which is growing a market and building lock-in -
because those things are worth a LOT. It's the same reason Uber is willing to
lose money on rides and eat legal penalties and get dragged into court: The
costs are worth the result. So I'm not convinced slapping FB with a $5b fine
_after this long_ is really going to have a deterrent effect. Hopefully it
does...

~~~
rejschaap
> "Scaled to the offense, not the offender" is a good principle

No, it's not, but it kinda works, well enough for most people. It punishes
poor people too harshly and wealthy people can shrug it off too easily. But
for the vast majority of people it works.

For companies it doesn't make sense at all, there just is too much variance
between companies. I also doubt it is what happened here, the 5 billion looks
scaled to the offender as well as the offense.

~~~
tptacek
In the sense that $5B almost certainly dwarfs by orders of magnitude any
revenue Facebook would have earned from lax API controls and sales of data to
analytics and adtech companies (gross as those practices were, they are not
Facebook's core business) and thus is wildly out of proportion to the offense
and thus unfairly _high_ , yes, I agree.

~~~
panarky
The magnitude of the offence isn't measured by how much profit Facebook made
from it.

When a guy robs $1000 from a bank, he'll spend years in prison.

It's a much bigger offence than the loss of $1000.

Likewise, Facebook's offence in intentionally and recklessly disclosing
private data on tens of millions of users has no relationship to how much
money Facebook made from the disclosure.

------
harryh
There's certainly a good argument to be made that the fine should have been
bigger, but statements like this misstate the facts:

 _" Here’s another way to say it: the biggest FTC fine in United States
history increased Mark Zuckerberg’s net worth."_

That's not what happened.

The stock went down in advance of the fine because the market knew it was
coming. The fine turned out to be a bit smaller than expected so the stock
recovered a bit. But Facebook stock would definitely be worth more if the FTC
hadn't acted at all.

~~~
changoplatanero
Or the fine turned out to be exactly as expected and the stock went up because
the uncertainty about the fine was resolved

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brianfitz
Markets will factor in all known information ahead of a fine such as this —
the possibility that it’s coming and some guess at the size and impact. In
doing so, this would depress the price of the stock leading up to any news.

Let’s assume that the estimate for the fine was exactly on the money — $5B. In
this case, you’d still expect to see a jump in stock price due to the removal
of uncertainty. Uncertainty can pull down prices just as much as bad news.

Throwing out any opinions of what Facebook did, the size of the fine, etc.
this is the type of simplistic reporting that gives the news media a black
eye. It also happens quite a lot with science reporting such as an article
last week on tube that could isolate sound based on its shape. The author made
many leaps that were ripped apart on HN.

Any particular instance won’t get noticed by the majority, but eventually an
article will get published to an area of your expertise and it’s just glaring.
When this happens enough times, you begin seeing the news in a much more
nuanced and different light.

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kellet
Fines are always going to be a slap on the wrist to FB. The purpose here was
to set precedent, but I don’t see it discouraging FB or any similar existing
company to change their behavior, because that would also require them to
change their business model. That’s not going to happen until users stop using
their service. Ultimately the net effect of this fine is to provide a roadmap
for future companies in how to formulate their business models. The problem
there is that tech will always be ahead of regulations by its very nature.

Btw, anyone know where that $5B gets put to use?

Maybe it should subsidize our taxes so that we can benefit from some of the
value we have generated for FB as users. Kind of like a refund for allowing
them to monetize our personal data.

------
riffraff
Doesn't this precedent open the gates for class actions?

That seems more important than the actual fine.

