Facebook Slapped With Record $5 Billion Fine By FTC
The Federal Trade Commission has voted to approve a record-setting $5 billion fine against Facebook (NASDAQ:FB) for violations consumers consumer privacy.
The decision came after regulators towed party lines with 3 republican regulators voting yes, while 2 democratic regulators voted no, citing a greater need for oversight on social media giants in regards to the handling of citizens personal data.
Fine against Facebook comes in slightly more than expected while critics argue it isn’t enough
The FTC began investigating Facebook for privacy violations after the Cambridge Analytica scandal broke out last year. That scandal saw 87 million people have their data taken and used for political aims and at that point, the conversation surrounding users privacy started to heat up. Since then, Facebook has come under additional scrutiny when it was found that the social media giant was selling data in ways that weren’t disclosed to users.
Facebook had set aside $3 billion for legal fees, and while the $5 billion fine seems massive on the surface, Facebook has been saying for months it expects a fine of $3 to $5 billion. The next largest fine the FTC has ever levied was $22.5 million against Alphabet’s Google (NASDAQ) back in 2012. In terms of monetary value, this is a huge step up for the FTC and it dwarfs what the EU could fine Facebook under its own privacy law.
Additionally, the FTC has the authority to hold Mr. Zuckerberg personally accountable for a slew of topics relating to Facebook’s various data misuses, and today’s ruling has eliminated that possibility. Zuckerberg will not face any personal consequences, and that’s where most critics will take issue with today’s announcement.
Overall it seems that the FTC is letting Facebook off with a rather light sentence. Regulators decided to not hold Facebook’s CEO and Founder Mark Zuckerberg personally accountable, despite the company closely following his direction since its very inception. Perhaps the best evidence that Facebook is getting a relatively mild slap on the wrist is its stock price; despite a “massive” $5 billion dollar fine, shares ended the day 2 percent higher. Investors feared much worse could happen and the fine was already baked into the stock’s price.