In 2011, the US Federal Trade Commission put Facebook under consent decree after the company “deceived consumers by telling them they could keep their information on Facebook private, and then repeatedly [allowed] it to be shared and made public.”
The way the FTC generally works is that if it catches a company doing something terrible, it issues one of these “consent decrees” which amount to, “don’t do it again, or we’ll take the company away.”
But Facebook did it again. Hard. And rather than shutting Facebook down, the FTC fined them $5B, which may sound like a lot, it’s only about 30% of the revenue from a single quarter and less than a quarter of the company’s annual profits. It’s basically a license fee for criminality, a tax on lawbreaking that allows the company to retain the vast majority of its profits from criminal activities.
And the street knows it. After the FTC announced the fine, Facebook’s share price went up.
And as Peter Kafka notes, regulatory compliance costs aren’t exactly a deterrent either: Facebook will pay the fine, eat the cost of a few more lawyers and PR people to ensure compliance with this new order, and carry on with the business of, uh, issuing a new worldwide currency while exposing underpaid contractors to horrifying videos of people being murdered for $15 an hour.
Facebook’s $5 billion FTC fine is an embarrassing joke [Nilay Patel/The Verge]