A Five-Billion-Dollar Parking Ticket

The judgment of the Federal Trade Commission fining Facebook $5 billion for privacy violations affecting an estimated 87 million users has been widely criticized as inadequate. Rightly so.

If one would figuratively place five billion one-dollar bills end to end, they would not even reach the ankles, much less the pockets, of the social media giant’s founder, Mark Zuckerberg. We are like a society of Lilliputians, tiny creatures struggling to contain the towering troll in our midst.

If you think that five billion dollars sounds like a punishing amount, you do not comprehend the scale of this operation. Facebook controls roughly 80 percent of the world’s social network revenues and 20 percent of U.S. online advertising space, according to Nick Clegg, the company’s VP for Global Affairs and Communications.

The firm had already notified shareholders that it had set aside $3 to $5 billion to cover possible penalties. When the news broke — pending expected Justice Department approval — the reaction was a general snubbing of the nose at the feds.

Instead of share values going down, they went up 1.8 percent!

Even though this was the heftiest fine ever imposed by the FTC, far surpassing the $22 million fine on Google in 2012, it could hardly serve as a deterrent to further misbehavior. The founder and CEO has actually seen his net worth rise since the FTC ruling. In late May, it was estimated by Forbes at $67.3 billion. The revised figure was not immediately available.

But what more could the FTC do? Apparently, it felt that a bigger fine was not possible, though why not was not explained, whether due to legal restrictions or a sense that it somehow wouldn’t be fair.

The result, though, was a ripple of derisive laughter through Wall Street and the “campuses” of high tech.

Matt Stoller, a fellow at the anti-monopoly think tank Open Markets Institute, compared this fine to a “parking ticket” in an interview with Wired. “We don’t think a fine matters. We need a structural solution here.”

Actually, the FTC ruling did include a regulatory remedy. The company will henceforth have to document how it plans to use data before any new product launches, and their executives will be required to put their names to a promise that user privacy will be protected.

The shortcoming of such an arrangement lies in the fact that the tech company becomes a partner in designing new rules and setting the bar for compliance. Zuckerberg himself has invited more government regulation of companies like his:

“I believe [we have] a responsibility to help address these issues, and I’m looking forward to discussing them with lawmakers around the world,” he wrote in a recent op-ed. “But people shouldn’t have to rely on individual companies addressing these issues by themselves. We should have a broader debate about what we want as a society and how regulation can help.”

However, the record belies the CEO’s sweet song of reasonableness. This latest case had ample precedent, such as how the company brokered special data deals with device manufacturers and large companies, even after the company supposedly reined in data access in 2015.

And then there was the TechCrunch report earlier this year describing how the company colluded with an app called Research to track user behavior to spy on the competition.

Some say the company’s willingness to accept regulation is pragmatic, because regulation is preferable to breaking up these tech juggernauts. What Zuckerberg really fears is cutting the company down to a more manageable size, and it has been suggested that both — more regulation and corporate breakup — should be implemented. Give them the best of both worlds.

“With the FTC either unable or unwilling to put in place reasonable guardrails to ensure that user privacy and data are protected, it’s time for Congress to act,” Democratic Senator Mark Warner of Virginia said.

He and Republican Josh Hawley of Missouri have drafted a bill that would require the largest platforms to disclose the financial value of their user data, as well as the financial value of related third-party contracts. The bill would also compel companies to inform users what information they collect and to give them options for deleting their data from a service.

Whatever the outcome, it has become clearer than ever that despite the social media company’s self-promotion as an empire of altruism, helping people to connect with family and friends, it stands exposed as a multi-billion dollar miscreant, a trafficker in confidential human data and the worst swill that passes for free speech.

Here too, in the privacy case that got the company into $5 billion of trouble, the violation occurred through the seemingly benign instrument of a personality quiz. Something for people who don’t know who they are but think somebody else can tell them. Well, the respondents found out who they are: unwitting targets of marketing.

It appears that the best remedy for dealing with this social media giant is for people to stay as far away from it as possible.

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