Critics Say Facebook Penalty Is A Slap On The Wrist As Stock Prices Surge
The FTC voted to approve the fine on Friday, according to The Wall Street Journal. The penalty comes as part of a settlement that would also require the company to transform its privacy practices. However, as The New York Times reported, the deal wouldn’t restrict Facebook’s ability to collect and share its users’ data with third parties.
If authorized by the Justice Department, it would be the largest fine the FTC has ever levied against a tech company.
Freedom from Facebook, an anti-Facebook coalition, described the punishment as a slap on the wrist and called on Congress to investigate the FTC. Republicans on the commission reportedly voted in favor of the settlement against Democrats, 3-2.
“Trump’s FTC commissioners have rolled over the monopoly, voting 3-2 for a slap-on-the-wrist settlement with Facebook,” the group said in a statement obtained by The Hill. “The FTC continues to lay bare their inability to protect American consumers and markets and Congress needs to investigate the FTC’s wanton disregard of their duties.”
While $5 billion is a record-breaking penalty, it likely won’t affect the company in a lasting way. Facebook set aside $3 billion earlier this year in anticipation of the fine. The company also made a profit of $22 billion last year and brought in $15 billion in revenue last quarter.
The punishment did have an effect on the stock market. After news of the fine made headlines on Friday, Facebook’s stock price surged to its highest point in nearly a year.
In a statement, Sally Hubbard of the liberal think tank Open Markets Institute said the settlement was “woefully insufficient” and suggested it encouraged Facebook’s bad behavior.
“The fine is a mere cost of doing business that makes breaking the law worth it for Facebook. To be effective, remedies must both curb Facebook’s widespread data collection and promote competition,” Hubbard said. “Otherwise, Facebook will continue to fortify its monopoly power by surveilling users both on Facebook and off, and users can’t vote with their feet when Facebook violates their privacy.”
Democrats on Capitol Hill also joined the chorus of critics outraged over the settlement.
Sen. Elizabeth Warren of Massachusetts, a 2020 presidential candidate, said the FTC let Facebook “off easy” for “allowing our elections to be improperly influenced,” referencing Russia’s social media influence in the 2016 presidential campaign.
In a tweet, Warren said Facebook should be disbanded by the FTC.
Sen. Mark Warner of Virginia, who is also the vice chairman of the Senate Intelligence Committee, said it was time for Congress to intervene in the FTC’s handling of Facebook’s violations.
Rep. David Cicilline of Rhode Island suggested the same.
In a series of tweets, Lindsey Barrett, a teaching fellow at Georgetown University’s Institute for Public Representation Communications and Technology Clinic, warned that the penalty would encourage Facebook and other tech companies to continue acting recklessly with data without the threat of severe repercussions.
Barrett worked as an extern at Facebook’s Privacy and Public Policy group, according to her Georgetown Law biography.
She also warned that other tech companies would “violate the law on as grand a scale and in as reckless a way” as Facebook did with Cambridge Analytica, the political data firm hired by the Trump presidential campaign in 2016 that was found to have secretly harvested Facebook users’ data.
It is now up to the Justice Department to review and authorize the settlement.