US Approve $5B Facebook Fine, Shares Soar
The US Federal Trade Commission has voted to fine Facebook roughly US$5 billion over its mishandling of data, including the Cambridge Analytica scandal – with shares soaring to their highest in a year.
Several commentators claim the penalty is just a ‘slap on the wrist’ (around three months revenue), and not enough to punish the social media giant.
Despite this, the fine will be the largest the US government has handed a tech company, beating Google’s $US22 million penalty in 2012.
Facebook is currently in the midst of multiple government inquiries around the world, including Australia.
Facebook made $5 billion in profits in just the first three months of last year. The company is too big to oversee, and this drop-in-the-bucket penalty confirms that. The FTC should break Facebook up, plain and simple. Enough is enough.
— Elizabeth Warren (@SenWarren) 12 July 2019
The Australian Competition and Consumer Commission recently handed the final results of its inquiry into Facebook and Google’s market dominance to the government.
The FTC matter is now in the hands of the Justice Department, which will review and finalise the Commission’s findings.
The settlement is expected to include a tightening of government restrictions on the treatment of user data and privacy according to the Wall Street Journal.
The Republican controlled Commission voted 3-2 in favour of the fine, with the two Democrats reportedly objecting with the view the settlement was too lenient.
Electronic Privacy Information Centre head Marc Rotenberg also raised issue with the size of the settlement, telling the paper “five billion is literally the cost of doing business”.
The FTC began investigating Facebook in the wake of the Cambridge Analytica scandal, focusing on whether the data ending up in the hands of the consulting firm violated an earlier agreement between Facebook and the Commission.
Facebook is also in the midst of two government oversight hearings relating to the market power of big tech firms and cyptocurrency.
The social media firm posted more than US$15 billion for Q1 of this year alone.
Facebook and other big tech companies such as Apple have recently made big claims about their new plans to correctly handle user data and properly protect their privacy.