Facebook will finally pay billions-for its privacy errors
When Mark Zuckerberg turned on Facebook's news feed in 2006, his users – exclusively college students at that time – were freaked out on the idea that Facebook automatically shared their posts with friends. Even digital natives were afraid to share a lot online. But Zuckerberg waited a few days, explained the product, told the users to "breathe", and the news feed became one of the most influential ideas of the 21st century.
Zuckerberg got out of the experience with a belief that has steered Facebook in and without problems since: People want less privacy on the internet than they think they do, and sometimes the only way to make them realize is to push them to share more.
And that was how he drove Facebook for most of the next 1[ads1]3 years. Every time Zuckerberg pushed the privacy limits, he would have a blow on his wrist and continue to roll out new disruptive products. Press. Retreat. Repeat. Navigating on these souls is as much as Zuckerberg's genius as his skill as a software engineer.
Until now. When Facebook released quarterly results Wednesday, it said it expects to pay a $ 3 billion to $ 5 billion fine for the US Federal Trade Commission to breach the terms of a 2011 deal with the agency to better protect users' privacy. Investors, who had expected a big fine, saw that Facebook's core business continued to grow robustly, responded with relief and pushed the company's stock up more than 7 percent in retrospect.
Facebook and the FTC have been locked into negotiations for months, and there had been news that the fine could be in billions. But there was also news that Facebook can fight against fines. On Wednesday, the first time Facebook recognized recognized potential sizes of fines. Facebook said it had not solved the case with the FTC. But it recorded a $ 3 billion quarterly revenue, suggesting it is planning to settle and trying to control the story.
The fines won't hurt Facebook financially, but it's big enough to hurt. $ 3 billion fee reduced first quarter earnings by more than half; The fine will cut the company's cash reserves by 7 to 11 percent.
Symbolically, however, the fine is enormously significant. Although Facebook has been pilloried for two years over its role in the US presidential election in 2016, for data leakage that created the Cambridge Analytica scandal, and for a fall in the fall that revealed the data of 50 million users, the company had never been officially punished by anyone meaningful way.
Facebook had been hammered into court in public. It forced it to dedicate billions to change the way it does business. And anyone who had sent the stock price on a roller coaster ride. But regulators had not previously been weighed in.
Perhaps more uminously, this will be the FTC's biggest fine for a large-scale technological company, and it is being charged in the midst of a very business-friendly Republican administration. The EU has fined Google over $ 8 billion on three occasions over the past four years for various antitrust and privacy violations. But the US under presidents Trump and Obama have taken a much less aggressive approach to regulating technology companies.
The largest former technology company final against a technology company was $ 22.5 million to Google in 2012, and accused the company of misrepresenting privacy settings in Apple's Safari browser. In fact, in the months immediately after the Cambridge Analytica scandal appeared last year, there was a debate in Washington on whether the agency would pay a fine at all.
But years of salmon are approaching privacy and user data, roles as the dominant media and communications companies of the 21st century, have increasingly fierce Americans – and now their government has noticed.
