قالب وردپرس درنا توس
Home / Business / The FTC's fine on Facebook will not change its practices

The FTC's fine on Facebook will not change its practices



  • Facebook's $ 3-5 billion fine to pay for a Federal Trade Commission investigation sounds big, but it's not really for the company.
  • As part of Wednesday's earnings report, Facebook announced it would provide $ 3 billion to pay the potential fine, although it found that a deal with the agency has not yet been finalized.
  • With $ 45 billion in cash and securities, Facebook generates $ 5 billion in cash each quarter, even after investing in real estate and equipment, so the fine can more than afford.
  • The fine is unlikely to change Facebook's behavior. Instead, the company probably sees only a simple cost of doing business.
  • Visit the Business Insider homepage for more information.

Facebook seems on the verge of breaking one of its biggest legal issues for something that is little more than a shift.

That sounds like a bad joke, but it's true. You can almost hear Mark Zuckerberg laugh from here.

As part of Wednesday's earnings report, the social media giant announced it was likely to pay a fine of $ 3 to $ 5 billion related to the investigation by the Federal Trade Commission our platform and user data practices ". Accordingly, the company provided $ 3 billion, which reduced the reported profit for the period.

The FTC still has an update to their more than a year ongoing Facebook investigation, and agency spokeswoman Juliana Gruenwald has rejected a Business Insider Wednesday request. Meanwhile, Facebook confirmed in a statement that it has not yet reached an agreement with the agency and does not know exactly when this will happen.

But you can bet that the company had not announced to put that amount aside if it did not think that an agreement would be anything but done and if it did not have a good idea of ​​the size of the potential fine The agency would charge against it. You can also bet on Ashkan Soltani, former Chief Technology Officer of the FTC, that the settlement will be all-inclusive and cover all sorts of violations of the 2011 agreement signed with the agency.

Read This : An Internet Pioneer Is Dubious Mark Zuckerberg may focus on privacy on Facebook. Here is the reason.

What's great for the FTC is not great for Facebook.

The FTC has been investigating Facebook's privacy practices since the Cambridge Analytica scandal broke last year. Since then, numerous cases have become known in which Facebook appears to have violated the privacy of users or affected the data contained therein. As recently reported, Business Insider announced that Facebook has harvested the email contacts of 1.5 million users without the users' consent.

Former Cambridge Analytica employee Chris Wylie helped direct the data leak of Facebook user information to the data company.
Neil P. Mockford / Getty Images

In addition to the FTC request, several states have filed a civil suit against the company. Both the US Department of Justice and the Securities and Exchange Commission, as well as overseas regulators, have initiated their own investigations. However, the FTC's fine is likely to be the largest when it comes to the monetary consequences that Facebook will face, over the last year, seemingly never-ending breaches of privacy and security. A fine of US $ 3 billion to $ 5 billion would be by far the largest ever issued by the FTC. But it will be anything but pointless for Facebook. The company can easily dismiss it as a business expense and continues what it has done.

Let's say $ 5 billion – the upper end of the range offered by Facebook for the fine – is the number the FTC and the FTC have agreed on. This amount represents about one-third of the company's revenue in the first quarter. This is traditionally a seasonally slower period. This is broadly in line with the amount Facebook generated in the first quarter, even after the amount of money booked to buy long-term assets such as computers and real estate was booked. That's about 11% of Facebook's $ 45 billion of cash and marketable securities.

In other words, the company will be able to easily pay the fine in a quarter of the operations if it does not just want to take money out of its bank.

Facebook will probably consider the fine as a business expense

Let's say otherwise. According to Forbes, Zuckerberg has assets of nearly $ 68 billion, almost exclusively from Facebook. Even at the top, the FTC's fine would not be 10% of it.

As big as $ 5 billion may sound and how big it might be compared to what the FTC has done in the past, it's just not much money for Facebook or Zuckerberg. Such a large fine will not hinder the company. It will not force it to go through massive changes. Heck, there's a fair chance that a fine of this size will not even encourage the company to rethink whether users' privacy will be hurt again.

Note the following: Facebook already knew in September 2015 that Cambridge Analytica had unlawfully received data on Facebook users, Business Insider reported. Since then, the social networking giant's businesses have generated around $ 52 billion in cash, even after deducting investment in real estate and equipment. From an ethical-free perspective, a $ 5 billion fee, if you make $ 52 billion, is an absolute bargain.

Facebook investors and analysts certainly seemed to see things this way. In the trade, according to his report, the shares of the company rose by 8%. Gene Munster, a longtime financial analyst who is now managing partner at Loup Ventures, briefly stated in a report, "Facebook's storm of tempests, is pleased."

Well, it is quite possible that the FTC forces Facebook, along with the fine, to agree to certain business restrictions. But the company is not worried about it. The FTC slept during the change over many years in terms of monitoring Facebook's adherence to the last agreement that the two sides had met the last time the agency violated users' privacy.

If the past is an indication, Facebook has a good chance, at least for years, of not being caught again if it violates the upcoming settlement. And even if this is the case, the FTC points out that the worst result is a fine that the company can pay out in three months.

So you better believe that Zuckerberg laughs out loud somewhere. Because the joke is all of us.


Source link